Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — MINISTRY OF DEFENCE

Royal Naval Ratings (Re-engagement)

Commander Courtney: asked the Secretary of State for Defence what is the present re-engagement rate for ratings of the Royal Navy completing their first period of service; if the figure is satisfactory; and if he will make a statement.

Commander Courtney: In asking this Question, Mr. Speaker, may I, on behalf of hon. Members on both sides of the House, say how very glad we are to see you back?

The Minister of Defence for the Royal Navy (Mr. Christopher Mayhew): May I associate myself warmly with the good wishes of the hon. and gallant Member for Harrow, East (Commander Courtney)?
About 53 per cent. This is not nearly as high as we would like. I am studying the problem urgently.

Commander Courtney: Is the hon. Gentleman aware that the re-engagement rate at present is perhaps even more important than the recruitment rate, and that to get a good re-engagement rate we must promise both officers and ratings a long and secure career? Are we to hear more about the expansion of the Navy, so confidently forecast by his right hon. Friend the Prime Minister, at Chatham, Devonport and elsewhere?

Mr. Mayhew: I entirely agree that we will not solve our problems only through recruiting, because by re-engagement we get trained men whom we could not get in years of training with recruits. I am not going to make any hopeful noises until I am certain that we can take positive action along the line I have suggested.

Mr. Hay: Is the Minister aware that the disincentive effect of the sort of noises the Chancellor of the Exchequer was making last week about cutting our defence commitments in various parts of the world will have a very grave effect on the re-engagement rate, and will he do what he can to persuade his right hon. Friend to be a little more sensible?

Mr. Mayhew: The hon. Gentleman has enough knowledge of these matters to know the principal difficulties we are up against—family separation and serious matters of that kind—and these will not be affected by the Chancellor's statement.

Variable Geometry Aircraft

Commander Courtney: asked the Secretary of State for Defence whether a requirement exists for the production of


a variable geometry carrier-borne multipurpose aircraft suitable for inter-Service use; and if he will make a statement.

The Secretary of State for Defence (Mr. Denis Healey): We are reviewing all aspects of defence policy and until the review is complete I am not prepared to make any statement on this question.

Commander Courtney: Does the right hon. Gentleman appreciate the great possibilities of the variable geometry principle at a time when our tactical air requirements all over the world have become more and more a question of operations from aircraft carriers? Does he realise what an important effect developments of this nature would have on the whole aviation industry, and on civil aviation, too?

Mr. Healey: There is a great deal in what the hon. and gallant Gentleman says, but I am afraid that I am not prepared to comment further at this time.

Cameron Barracks, Inverness and Fort George

Mr. Russell Johnston: asked the Secretary of State for Defence whether he will make a statement on the future of the Cameron Barracks, Inverness and Fort George.

The Under-Secretary of State for Defence for the Army (Mr. G. W. Reynolds): About half of Cameron Barracks, Inverness, is to be used to accommodate Territorial Army units and the Regimental Headquarters of the Queen's Own Highlanders (Seaforth and Cameron). The future of the remainder is under consideration.
Fort George is being used as a camp and training centre for Territorial Army and Cadet units for a trial period of three years. The use of Fort George in the long term will be decided when its success as a training centre has been fully assessed. It is also proposed to locate the regimental museum of the Queen's Own Highlanders in the fort. In addition, my right hon. Friend the Minister of Public Building and Works is now maintaining the historic parts of the fort as an ancient monument and intends to open them to the public.

Mr. Johnston: Is the Under-Secretary aware that there is considerable concern at

the uncertainty about the final use of both these buildings, particularly, for example, in regard to Fort George, and that there are considerable potentialities for the development of tourism in association with the beach which is adjacent to the fort? Will the hon. Gentleman bear these things in mind and reach a quick determination of what exactly should be done with these buildings?

Mr. Reynolds: I will certainly keep in touch with the local authorities on both these cases. In regard to Fort George, we will not be able to look at that in greater detail until we have seen how the present proposed use works out in the area. This fort was built to maintain Hanoverian rule over rebellious and reluctant Scottish peasantry. But they seem to have succeeded in revolting again last month.

Service Men (Death Overseas)

Mr. Allason: asked the Secretary of State for Defence what representation of the deceased, or of the deceased's next of kin, is permitted at Service inquiries in substitution of inquests overseas, upon the death by accident of a Service man.

Mr. Mayhew: These Service inquiries are not in substitution of inquests. They are strictly domestic and non-judicial for the purpose of determining whether Service procedures are being complied with and whether they require improvement and for reporting the facts to higher Service authorities. Thus representation of next-of-kin would be inappropriate.

Mr. Allason: Does the hon. Gentleman realise that the next-of-kin are very interested, because this is very similar to an inquest and the next-of-kin can only learn from this whether their son or husband was to blame? Is he aware that there is a rule of procedure which says that when anyone's character or conduct may be impugned he is entitled to be represented? Why should not a dead man have the same entitlement as a live man?

Mr. Mayhew: The rule does not say anyone. There may be Service men involved in subsequent disciplinary proceedings. This is not like an inquest. The proceedings are confidential and


there is no judicial procedure, and thus it would be very difficult for the next-of-kin to be represented.

Mr. Driberg: Is an inquest held as well when a Service man dies as a result of an accident?

Mr. Mayhew: It depends on the country. In Germany, for instance, they do not have our procedure.

Mr. Stratton Mills: Would the Minister look at this again from the point of view of the relatives of a man killed in Germany? Is he aware that the relatives are at a disadvantage compared with the case where a death takes place in this country, and will he look sympathetically at this whole question?

Mr. Mayhew: I appreciate the anxiety felt, and a thorough inquiry was made quite recently to see if we could cover this point. The trouble is that we cannot hold an inquest in Germany, but it is, on the other hand, possible to hold an inquest in this country on deaths that have occurred in Germany.

Mr. Allason: In view of the unsatisfactory nature of the reply, I beg to give notice that I will raise the matter on the Adjournment.

Surface-to-Surface Missiles

Mr. Wall: asked the Secretary of State for Defence if he will make a statement about the development of British surface-to-surface missiles for the Royal Navy and the Army.

Mr. Healey: I am reviewing the content of the defence programme as a whole and until the review is complete I am not prepared to make any statement on this subject.

Mr. Wall: Is the right hon. Gentleman aware that the Royal Navy has no surface-to-surface missiles while the Army operates the obsolete Corporal, the Germans have the Sergeant, and the Americans have no fewer than 37 surface-to-surface missiles? Will he look at this carefully?

Mr. Healey: I am very well aware of these facts. One of the things that I noticed when I took office was that my predecessor on cancelling Blue Water, after an expenditure of £32 million, left

the British Army totally dependent upon the United States for ground-to-ground missiles.

Commander Courtney: Can the right hon. Gentleman confirm that in the absence of a surface-to-surface guided missile for the Royal Navy the main arm of the Fleet remains the fixed-wing carrier-borne aircraft?

Mr. Healey: I think that is the case.

Army (Recruitment)

Mr. John Hall: asked the Secretary of State for Defence what plans he has for increasing the present level of recruitment to the Army.

The Deputy Secretary of State and Minister of Defence for the Army (Mr. Frederick Mulley): I shall continue with current recruiting measures which have succeeded in increasing the other rank strength of the Army, including young soldiers, to 156,980. This represents an increase of over 5,000 in the last 10 months, and the Army's strength is now within 2 per cent. of the 160,000 other ranks at which we are aiming.

Mr. Hall: On the assumption that the Rhine Army is to be increased to its target strength of 55,000, is the right hon. Gentleman satisfied that the present recruiting rate is sufficient to enable us to meet that target or is the target to be met by withdrawing troops from other areas?

Mr. Mulley: The hon. Gentleman is an old enough Parliamentarian to realise that he should not try to anticipate Questions put down by his hon. Friends later on the Order Paper, and therefore I shall leave the question of the Rhine Army until those Questions are reached. I am satisfied that the target of 160,000 men, which was set by the previous Government, will be reached towards the end of next year.

Mr. Emrys Hughes: Is my right hon. Friend aware that the greatest task facing this country at the present time is the problem of increasing its imports and that to do that we need—[Interruption.]—I mean exports. I am coming to the point which hon. Members opposite will not like. Is he aware that the economic difficulties of this country cannot be solved until we reduce armies,


like the British Army on the Rhine, and face our economic problem, which is the supreme task, and we hope that the Government will face it?

Mr. Mulley: The question of the Rhine Army is to be dealt with on a later Question. I am quite sure that we can maintain an Army of the size indicated, although I appreciate my hon. Friend's concern that if we had no armed forces at all then of course we should incur no expense for them. I cannot share that point of view.

Mr. Goodhart: In view of the pre-election and election pledges on increased manpower made by the party opposite, can the Minister say whether increased manpower targets were set at the Chequers meeting, and in view of the fact that his Ministry and the Treasury seem to be pursuing rival defence policies and briefings, can he say whether the Treasury's approval for more men has been obtained?

Mr. Mulley: I think that Questions to my right hon. Friend the Chancellor of the Exchequer ought to be addressed to him and not to me. As my right hon. Friend the Secretary of State has already said in reply to several Questions, we are in the course of reviewing our defence policies and requirements, and it would be very premature and unwise to disclose bits and pieces before that review is completed.

R.A.F. (New Aircraft)

Sir J. Eden: asked the Secretary of State for Defence, when the Royal Air Force is to be equipped with the TSR2 and with supersonic vertical take-off and landing aircraft; what progress is being made with crew training in both cases; and if he will make a statement.

Mr. Healey: I shall be making a full statement when the Government's review of defence policy has been completed.

Sir J. Eden: Cannot the right hon. Gentleman at least give some information to the House and some idea of what is the state of his mind on these things? Could he not, for example, say what progress the advanced weapons system TSR2 is making in overcoming its inevitable teething troubles, and would he press on, as a matter of urgency, with the V.T.O.L. supersonic Hunter replacement? Would he not agree that both

these projects are vital to the future of the Royal Air Force, and will he end the prevailing atmosphere of uncertainty which is doing nothing but harm?

Mr. Healey: I am surprised that the hon. Gentleman wishes me to break a precedent so firmly established by his right hon. Friend, my predecessor, the Member for Monmouth (Mr. Thorneycroft).

Mr. Ridsdale: Is the right hon. Gentleman aware that because of some of the rumours that have been circulating about the TSR2, many people believe that he is going to foist the Bucanneer as a replacement for the Canberra, and will he deny this as early as possible?

Commuted Pensions

Mr. Maxwell-Hyslop: asked the Secretary of State for Defence, if he will initiate a complete review of the system of commuting pensions of non-commissioned ranks in the Armed Forces, including the delays in making the commuted pension available, and the basis on which the commuted pension quantum is computed.

Mr. Mayhew: I am looking into the hon. Member's suggestions and will write to him.

Mr. Maxwell-Hyslop: Will the right hon. Gentleman bear in mind two things? One is the sense of injustice experienced by people who have commuted their pension and do not receive any extra money when there is a Pension (Increase) Act on the part of the pension which has been commuted? Secondly, will he bear in mind the necessity for speed in commuting pensions for ex-Service men who come out with specific motives, for instance to take over a business, a pub or a shop, and who are unable to get the money to do so before the business is sold to someone else?

Mr. Mayhew: We shall certainly look into those points. We are worried about the anomalies which exist between commutation rights for officers and those for other ranks.

Nuclear Weapons

Mrs. Renée Short: asked the Secretary of State for Defence what plans he has to reduce expenditure on nuclear weapons.

Mr. Orme: asked the Secretary of State for Defence what the estimated saving on nuclear weapons is likely to be as a result of Her Majesty's Government's new policy.

Mr. Healey: I have nothing to add to what I said in my speech in this House last Monday.

Mrs. Short: Is my right hon. Friend aware that there is very grave concern in this House and in the country at the distortion of our national economy caused by the burden of over £2,000 million a year being spent on armaments, thrust upon the people of this country by the previous Administration, and will he make these views known on his forthcoming visit to Washington?

Mr. Healey: The hon. Lady will know that I made this point myself last week.

Mr. Orme: Will my right hon. Friend also bear in mind that any saving on nuclear weapons which comes about should be redirected to strengthening the economy and the social services at home, which are so essential at the present time, and that his right hon. Friend the Prime Minister said that military strength depends on economic strength at home?

Mr. Healey: As to the last part of my hon. Friend's supplementary question, I think that he was quoting the words which I used myself in the debate last Monday. As to the first part, I would say that it will be Her Majesty's Government's intention to make sure that this country has the defences required to ensure its own security and influence in the world, and this must be the first call on defence savings.

Sir Knox Cunningham: Will the right hon. Gentleman do nothing to accede to these requests and make quite certain that he will do nothing to damage the defence of our country?

Mr. Frank Allaun: asked the Secretary of State for Defence if he will state the total direct and indirect expenditure this year on nuclear weapons; and what proposals he has for reducing it.

Mr. Healey: It would not be in the public interest to disclose these figures. As I have explained, it is too early for me to announce publicly our future plans for nuclear weapons.

Mr. Allaun: Is it not a fact that any attempt to keep up with the United States or Russia in the nuclear arms race would worsen the financial mess left by the previous Government?

Mr. Healey: As I pointed out in the defence debate last week, it is essential that Britain should decide which of its major defence rôles shall have priority. I indicated that it should not be the nuclear one.

Sir Rolf Dudley Williams: Will the right hon. Gentleman inquire of the Colonial Secretary as to whether he put up his Parliamentary Private Secretary to ask this Question?

Military Base, Aden

Mr. Fisher: asked the Secretary of State for Defence what is the policy of Her Majesty's Government towards the retention of the British military base at Aden.

Mr. Healey: Her Majesty's Government's policy is to retain the base, in agreement with the Government of the Federation of South Arabia, for so long as it is required to serve the interests which we have in common.

Mr. Fisher: Is the right hon. Gentleman aware that we on this side of the House are very glad that something positive has come out of the meeting? Is he also aware that we welcome very much this decision, which we think will be welcomed also by many people in Aden and South Arabia who recognise that while we have strong strategic reasons for maintaining the base they also have strong economic reasons for wishing us to do so?

Mr. Healey: I believe that this is indeed the case, and the hon. Gentleman will remember that I made this point myself several months ago.

Mr. Kershaw: Will the right hon. Gentleman convey to his right hon. Friend the Chancellor of the Exchequer how very undesirable it is to continue to make uncertain pronouncements about the cut-back that we are going to make in our defence commitments, one of which may be Aden, because this encourages the sort of action which we saw yesterday, the very regrettable bomb explosions in Aden, because people think that they can shove us off if they try?

Mr. Healey: I think that the hon. Member, in seeking to link these two events, is making a connection which can bear no conceivable relationship to the truth, and he knows this as well as I do. If he regards uncertainty as to the commitments which this country will maintain as undesirable, he should not seek deliberately to increase that uncertainty by making unwarranted imputations about the remarks of my right hon. Friend the Chancellor of the Exchequer.

Mr. Lipton: Would my right hon. Friend say what representation he is making to the Egyptian Government who are suspected of being responsible for these recent bomb outrages?

Mr. Healey: That is a question for my right hon. Friend the Foreign Secretary.

Mr. Thorneycroft: Does the right hon. Gentleman realise that the statements which have been made by the Chancellor of the Exchequer, which have put every rôle in doubt and made every project now unsure, is a state of affairs which could not continue without putting our defences at a very great disadvantage in the world? Will the right hon. Gentleman take the earliest opportunity of conveying to the Chancellor of the Exchequer the request that he does not make any more statements before Christmas, and himself try to clear up these defence aspects as soon as possible?

Mr. Healey: I am quite satisfied that what my right hon. Friend he Chancellor of the Exchequer said—I have seen the text of his statement and, of course, I heard it in the House, as all hon. Members did—is precisely in line with what I said on Monday of the previous week, occasioning no particular questioning from hon. Members opposite.

Dockyard Workers (Wages)

Brigadier Clarke: asked the Secretary of State for Defence if he will bring average wages for Her Majesty's Dockyards both for skilled and unskilled workers up to the national average.

The Under-Secretary of State for Defence for the Royal Navy (Mr. J. P. W. Mallalieu): The latest available figures of national average earnings are for April, 1964, when they were

£17 12s. 5d. for 47·8 hours. The dockyard figure for the same date was £17 ls. 9d., also for 47·8 hours. In drawing any comparison it is necessary to take into account the value of superior fringe benefits enjoyed by the dockyard worker which, in fact, makes him better off than the average man nationally.

Brigadier Clarke: Does the hon. Gentleman realise that his party has a very bad record in the dockyards, that between 1945 and 1950 the wages of both skilled and unskilled rose by 6s. whereas under the Conservative Government they rose by 10s. a year? Neither is enough, and I hope the hon. Gentleman will do something more for the dockyards.

Mr. Mallalieu: I find from the reception in the dockyards to the change of Government that it has been very much to the delight of the people who work there.

Simonstown Naval Base

Mr. Wingfield Digby: asked the Secretary of State for Defence how many of Her Majesty's ships have used the Simonstown naval base in the last three years.

Mr. Mayhew: Five frigates, four submarines, an icebreaker, and a Royal Fleet Auxiliary. The frigates each spent 16 weeks at Simonstown for maintenance and repairs. The icebreaker and the R.F.A. also undertook maintenance and repairs there.

Mr. Digby: While expressing relief that the future use of this base seems to be more assured, may I ask whether it is not a fact that those figures are not a true reflection of its importance, as there are no other dockyard facilities on the route round the Cape?

Mr. Mayhew: If the hon. Gentleman wished for figures and facts on that particular point, he should have asked for them.

Mr. William Hamilton: asked the Secretary of State for Defence (1) what steps he is taking to establish an alternative base to that at Simonstown;
(2) what estimate has been made of the cost of establishing in the South Atlantic or the Indian Ocean a naval base to replace the facilities now available at Simonstown.

Mr. Healey: There is no question of our losing the facilities we enjoy under the Simonstown Agreement.

Mr. Hamilton: Does not my right hon. Friend think it reprehensible that this country should be dependent on the good will of a quite reactionary Nazi-type régime such as exists in South Africa? Is it not the case that the military advice that my right hon. Friend gets is against the suggestion that this is so vital to our defence programme? If so, would not my right hon. Friend think again of looking for alternative bases where we have not got to depend on this kind of régime?

Mr. Healey: This base is of considerable value to the Royal Navy and, as I said before, we have no intention of seeking to abandon it.

Mr. Atkins: Does the right hon. Gentleman agree that the only possible alternative to Simonstown is vastly to increase the tremendously expensive fleet train?

Mr. Healey: No.

Sir Rolf Dudley Williams: Does the right hon. Gentleman realise that he has tremendous sympathy from this side of the House in having to resist the remarks that are made by the hon. Member for Fife, West (Mr. William Hamilton)? Is he aware that we also sympathise with him in having to deal with South Africa on this important topic, in view of the irritation caused to that country by the Prime Minister himself?

Mr. Healey: I think the hon. Gentleman's expressions of sympathy are misplaced and unrequired.

Sir W. Anstruther-Gray: asked the Secretary of State for Defence what consultation he has had with the Australian Government over the defence aspect in the Far East of the Simonstown Agreement.

Mr. Healey: None, Sir.

Sir W. Anstruther-Gray: Will the right hon. Gentleman bear in mind that in any consideration he may be giving to the position of Simonstown he should make sure to take the Australian Government into the closest possible consideration?

Mr. Healey: The right hon. Gentleman knows that the Simonstown Agree-

ment is a bilateral agreement, but of course in any consideration of the Simonstown base we take into account the needs of Commonwealth countries, indeed of all countries with which we are in defence relationship.

Space

Mr. Ridsdale: asked the Secretary of State for Defence whether the findings of the committee inquiring into British defence interests in space, under the chairmanship of Professor Bondi, will be made public.

Mr. Healey: No, Sir.

Mr. Ridsdale: Why is the Secretary of State being so secretive? Is it not in the general defence interests of the country that the findings of previous committees should be published while we are awaiting the findings of the Bondi Committee?

Mr. Healey: I think this arises from the hon. Gentleman's next Question.

Mr. Ridsdale: asked the Secretary of State for Defence why it is the practice not to give information about the general conclusions reached by committees that have recently sat on the question of space, or the names of their chairmen.

Mr. Healey: The task of official committees is to provide confidential advice to Ministers, and it has never been the general practice to publish the findings or membership of such committees.

Mr. Ridsdale: Is the right hon. Gentleman aware that now that he has publicly stated that Professor Bondi is not going to make the findings of the committee public, surely we should know what the findings of these other official committees were, particularly as there were on those committees some very distinguished people? How much did they advise should be spent and what were the priorities given?

Mr. Healey: I think the hon. Gentleman knows as well as I do that when official committees are set up under the chairmanship of an official to advise the Minister, it is highly undesirable that the committee's conclusions or the evidence which it considered should be published. The Bondi Committee which


has just been set up is a committee with an independent chairman, with wide outside representation. That is why Her Majesty's Government decided to publish the fact that it was being established but on this, as on previous committees, it is not the intention of the Government to publish the report.

Sir G. Nicholson: Is it not undesirable when it is not intended to publish the names or to refer to the members of a committee or its findings, that it should be mentioned in this House or anywhere else? Surely, it should remain completely confidential?

Mr. Healey: I have just stated that in this case of the Bondi Committee a very distinguished independent chairman was appointed and wide outside representation was invited. It was in order to prevent unnecessary speculation on the existence of the committee and additional risks to security that it was decided to publish the fact that it had been appointed, and I think the House will recognise that this was a wise decision.

Ground Support Unit, Tangmere

Mr. Loveys: asked the Secretary of State for Defence when the ground support unit will be accommodated at Royal Air Force, Tangmere, and for how long it is proposed to remain at this station.

The Under-Secretary of State for Defence for the Royal Air Force (Mr. Bruce Millan): The 38 Group Ground Support Unit will move to Tangmere from Odiham during the first half of December. On present plans, it will stay there until early 1967, when it will return to Odiham, by which time permanent accommodation for it there will have been completed.

Mr. Loveys: Is the hon. Gentleman aware that the rather temporary arrangements will cause concern to those who have been expecting permanent employment on this airfield? To what extent will the unit be Service-manned and how many extra civilian jobs will be available?

Mr. Millan: I am afraid that there will be very few extra civilian jobs available—probably between 10 and 15—because the ground support unit is Service-manned and virtually self-contained.

Lodgings and Furnished Houses, Weymouth and Portland

Mr. Evelyn King: asked the Secretary of State for Defence if he is satisfied that an adequate number of suitable lodgings and furnished houses in the Weymouth and Portland area is available for the accommodation of officers and petty officers of the Royal Navy and their families; and what steps he is taking in regard to the provision of such accommodation.

Mr. Mayhew: There is no great difficulty in housing officers and their families in this area; there is a short waiting list for chief and petty officers, and a slightly longer one for junior ratings; the position will improve from the end of this year onwards because we are building a large number of married quarters.

Mr. King: Is the hon. Gentleman aware that in the interval the position is likely to be made worse by the provisions of the Protection from Eviction Bill, which will operate very harshly on landlords and landladies in seaports and seaside resorts? Will he make representations to the Minister of Housing and Local Government in respect of the Service he represents?

Mr. Mayhew: In this case I do not anticipate difficulty. We have a large number, 46 officers' and 150 ratings' married quarters, going up from the beginning of this year and ending by 1966. Bearing in mind the present demand, we do not expect difficulty in this area.

Mr. Allason: Does not this depend on families leaving when the ratings go overseas? Is there not equally a difficulty when these families have to find accommodation somewhere else in the country? What arrangements does the hon. Gentleman have for that?

Mr. Mayhew: I am not aware that that problem, although it exists, arises in this area.

Greenham Common Air Base

Mr. Astor: asked the Secretary of State for Defence whether, in view of the fact that the Greenham Common Air Base has been unoccupied since last June, he will consult other Government Departments, including the Department of Education and Science and the Ministry of


Health, so that it may be put to an alternative use without further delay, if it is not required for defence purposes.

Mr. Millan: Other Government Departments, including the two referred to by the hon. Member, have already been consulted.

Brigade of Gurkhas

Sir J. Smyth: asked the Secretary of State for Defence (1) if he is satisfied that the high standard of British officers from Sandhurst for the Brigade of Gurkhas is being maintained; and if he will make a statement;
(2) if he will give an assurance that the Brigade of Gurkhas will be kept at its present strength.

Mr. Scott-Hopkins: asked the Secretary of State for Defence how many Gurkha troops are now enlisted in Her Majesty's Forces; where they are serving; what is the rate of recruitment; and whether he will make a statement on the future policy concerning the maintenance of the Gurkha Brigade.

Mr. Mulley: I am satisfied that the officers accepted by the Brigade of Gurkhas are, in every way, up to the high standard required.
The total number of Gurkha troops, including boys, in British service on 1st October, 1964, was 14,000. The Brigade of Gurkhas is deployed in Malaysia and Hong Kong; it is playing a distinguished part in operations in Borneo. In the current year 900 men and 100 boys have been recruited. We do not intend to alter the size and organisation of the Brigade of Gurkhas in present circumstances.

Sir J. Smyth: Does the hon. Gentleman realise that, although the Brigade of Gurkhas is getting the required numbers of British officers from Sandhurst, I am informed that they are not of the high standard that they were a few years ago and that this is because parents of these young men do not believe that they have a settled career in the Gurkha Brigade? I ask the right hon. Gentleman to allay this anxiety. In regard to my second Question on Gurkha recruiting generally, there is still a feeling in the Gurkha Brigade that they have not got a very settled future and this is affecting recruiting in Nepal, and the general problem of

—[Interruption.] I have two Questions on the Order Paper. This is affecting recruiting and maintenance in the Gurkha Brigade. I suggest—[HON. MEMBERS: "Question."]—that one of the Ministers should go to Nepal and look at these problems for himself.

Mr. Mulley: In reply to the first Question—

Mr. Heffer: On a point of order. As a new Member I should like to know what length one is allowed for a supplementary question.

Mr. Speaker: The answer is, as short as one can possibly manage on every occasion.

Mr. Mulley: I shall endeavour to set an example by giving short replies, although the points raised by the right hon. and gallant Gentleman are of importance to many hon. Members. We are satisfied that the quality of candidates at Sandhurst who opt for the Gurkhas is up to the standard required. It is true that their average passing out mark has been a little lower last year than in previous years, but there were 12 who chose the Gurkhas this year against 10 in the previous year. I can assure the right hon. and gallant Gentleman that even if the proposals of the previous Administration were proceeded with to cut down the Gurkhas there would be a career for young men who opt for the Gurkha Brigade. I hope to take the opportunity to go to see them in Malaysia, including Borneo.

Mr. Scott-Hopkins: Does the hon. Gentleman agree that the work they are doing in Borneo is absolutely invaluable? When he goes to try to increase recruiting, will he see that leave and facilities for the Gurkhas at home stations are improved?

Mr. Mulley: I repeat that it is my intention to go to see for myself at the first opportunity. The intake of recruits this year was 900 men and 100 boys, which is the maximum the training organisation can handle in any year.

Warships (Construction)

Mr. McMaster: asked the Secretary of State for Defence what plans the Government have for the construction of additions to, or replacements of, warships in Her Majesty's Navy; and what criteria


will be employed by Her Majesty's Government in deciding where such orders will be placed.

Mr. Healey: We intend to follow the normal practice of placing orders for ships by competitive tender whenever possible. In this way, all firms capable of building the ships, including those in areas of underemployment, have equal opportunity to win the contracts.

Mr. McMaster: Will the right hon. Gentleman bear in mind when placing these contracts the magnificent record of Harland and Wolff in two world wars and since in building ships of every class from frigates to aircraft carriers?

Mr. Healey: I shall bear that fact in mind, together with all other relevant considerations.

Mr. William Hamilton: Can my right hon. Friend say whether in placing these contracts any preferential treatment can be given to yards which happen to be in development districts?

Mr. Healey: I think the whole House will agree that it is the duty of the Ministry of Defence to ensure that the country gets the weapons it needs as good, as fast and as cheaply as possible, but experience has shown that it is possible to meet the needs of development districts consistent with these considerations.

Mr. Hay: Will the right hon. Gentleman address his mind to the first part of the Question? Can he tell us what plans the Government have for construction or additions to or replacement of warships? Will he bear in mind that in a celebrated speech at Plymouth on 17th December the Prime Minister promised a greatly increased naval shipbuilding programme, and that we should like to know what the Government have in mind?

Mr. Healey: I think you, Mr. Speaker, would agree that the business of the House would be accelerated if hon. Members would read the Order Paper. There is a Question on this subject to be asked by one of the hon. Friends of the hon. Member for Henley (Mr. Hay).

Emergency Reserve (Strength)

Mr. Scott-Hopkins: asked the Secretary of State for Defence what is the present strength of the Ever-Readies;

and whether he will make a statement as to the future rôle of this body.

Mr. Mulley: 6,297, on 31st October, 1964. No change in the rôle of the Territorial Army Emergency Reserve is contemplated.

Mr. Scott-Hopkins: Does the right hon. Gentleman intend these men to serve overseas? What rôle has he in mind for them in Germany?

Mr. Mulley: The rôle we have in mind is precisely that under which they are enlisted, that they are available at very short notice to reinforce the Regular Army for a period up to six months. If the circumstances were to justify their being called up for this purpose, I am sure that my right hon. Friend would decide to do so.

Mr. Shinwell: Would my hon. Friend be good enough to inform the House how much money has been wasted on this senseless project, and what this or any other Government contemplate doing with this force that has had practically no training whatever?

Mr. Mulley: I cannot tell my right hon. Friend without notice the exact sum that has been spent—whether it has been wasted is perhaps a matter of opinion—but I shall send him the figure of the total cost. I can tell him that the Reserve forces as well as the Regular forces will form part of the review which my right hon. Friend is now undertaking?

Cyprus (Expenditure)

Mr. Emrys Hughes: asked the Secretary of State for Defence what was the national expenditure on Cyprus from the time it became a base to 15th October, 1964; and what is now the estimated weekly cost of the base.

Mr. Healey: Defence expenditure in Cyprus from 1st December, 1954, to 15th October, 1964, was about £210 million. The estimated weekly cost of the base at present is about £400,000.

Mr. Hughes: Is my right hon. Friend aware that this is the first time for the last 10 years that I have been able to get a satisfactory account of expenditure in Cyprus? Is he aware that if he is looking at this item of expenditure with the prospect of reviewing it, we shall be


very pleased indeed? If he is going to Cyprus will he take Dr. Beeching with him?

Mr. Healey: I am very grateful to my hon. Friend for those few kind words. I shall bear them in mind on future occasions.

Mr. Kershaw: Will the right hon. Gentleman bear in mind the difficulty of fulfilling our obligations to C.E.N.T.O. without the Cyprus base, and will he say how over-flying rights would be affected without it?

Mr. Healey: I am fully aware of both considerations.

Spain (Joint Naval Exercises)

Mr. Wall: asked the Secretary of State for Defence why the joint British-Spanish naval exercises planned for next month have been cancelled.

Mr. Healey: Provisional arrangements for this joint naval exercise had been under consideration for several months. However, the timing of the exercise was such that the new Government was left with insufficient time to consider fully all the implications. This being so, the Government felt unable to approve this particular exercise going ahead.

Mr. Wall: Perhaps the right hon. Gentleman finds it surprising that a proud nation like the Spaniards did not immediately react to this out-of-date political rancour. The people of Gibraltar would be the first to benefit from good Anglo-Spanish relations.

Mr. Healey: I think that on reflection the hon. Member will recognise that it was a great mistake to link recent events in Gibraltar with the British Government's action about the Spanish exercise, particularly as the threats of action in Gibraltar were made at the United Nations during the previous Administration.

Commander Courtney: Can the right hon. Gentleman say why he and his party did not object to the holding of Anglo-Yugoslav exercises under the last Government?

Mr. Healey: The same technical considerations did not arise.

Royal Navy (Size)

Mr. Channon: asked the Secretary of State for Defence what proposals he has for increasing the size of the Royal Navy.

Mr. Healey: I shall not frame proposals affecting the size of our forces until our review of defence policy as a whole has been completed.

Mr. Channon: Is the Secretary of State aware—I am sure he is—that the Prime Minister made some very interesting suggestions for increasing the size of the Royal Navy—by a curious chance at Plymouth and Chatham? If these proposals should be implemented, which I am sure we all wish to see, the cost of the Royal Navy will go up rather than down.

Mr. Healey: The hon. Member will be aware that since the Labour Party was last in power the number of cruisers has decreased from 15 to two, the number of carriers from nine to four and the number of escort craft from 95 to 71. I can assure the House that the present Government will have a far better record concerning the Royal Navy than the last Government had.

Mr. Thorneycroft: Can the right hon. Gentleman quite simply say if he proposes to honour the pledge given by the Prime Minister to increase the size of the Royal Navy?

Mr. Healey: I cannot anticipate my statement on the review of defence policy and commitments now under way.

Mr. Michael Foot: Does not my right hon. Friend agree that his Answer reveals that Her Majesty's patriotic Opposition is much more eager to increase the size of the Spanish Navy than the British?

Mr. McMaster: On a point of order. In view of the unsatisfactory nature of the reply to this Question and to part of Question 23, I beg to give notice that I shall raise the matter again.

Mr. Speaker: It should be related to one Question only or we get into a muddle. It will have to be related to the last one.

Armed Forces (Recruitment)

Mr. Channon: asked the Secretary of State for Defence what proposals he has for increasing regular recruitment to the Armed Forces.

Mr. Mayhew: My right hon. Friend has already dealt with recruiting for the Army.
Measures to stimulate recruitment for the Royal Navy include the strenghthening of the recruiting and publicity organisations, under a new appointment of a Director General Naval Recruiting.
The Royal Air Force has no immediate manpower problem; until the summer of this year recruiting for ground trades has been severely restricted because of the reduction in the size of the force. Experience since it was resumed suggests that in general requirements will be met.

Mr. Channon: Would not the hon. Gentleman agree that vague talk about reexamining defence commitments, coupled with promises, repeated today, for increasing the size of the Royal Navy, leads to considerable confusion in the Armed Forces and among those considering joining and is, therefore, likely to detract from recruiting rather than increase it?

Mr. Mayhew: The last Government left behind an acute manpower situation in the Royal Navy. I do not think it would be a good thing to spell out all the facts of that position. In return, perhaps the Opposition will use some restraint on this matter as well.

Chequers (Military Guard)

Brigadier Clarke: asked the Secretary of State for Defence what was the cost of providing a military guard at Chequers for the week ending the 21st November.

Mr. Mulley: The only extra expense incurred in employing Royal Military Police at Chequers was their movement from their normal stations, which amounted to £40 10s. 0d.

Brigadier Clarke: Does the right hon. Gentleman realise that many people considered this a very unnecessary guard to look after a handful of Ministers? At that time—I repeat, at that time—no one wanted to shoot them. Today, of course, it is different.

Mr. Mulley: I am quite satisfied that the military police even today would be able to provide adequate security. While I know that the hon. and gallant Gentleman has not very much time for Her Majesty's Ministers, he should perhaps have some regard for the safety of the Chiefs of Staff, who were also at Chequers.

Mr. Solomons: Arising from this exercise, would my right hon. Friend be prepared to work out the cost of the grooms and batmen who dance attendance upon the wives of senior officers at the Harrow and Eton cricket match?

Mr. Speaker: Order. That is intriguing, but it does not arise from this Question.

Mr. Biggs-Davison: Was not the purpose of this extraordinary guard to protect Ministers from a possible putsch by the Young Socialists?

Mr. Mulley: I think that the hon. Gentleman could do better than that if he really tried.

H.M.S. "Relentless" (Incident)

Captain Orr: asked the Secretary of State for Defence if he will make a statement about the circumstances in which H.M.S. "Relentless" was fired upon in Cork Harbour on Saturday 21st November.

Mr. Mayhew: H.M.S. "Relentless" was leaving Cork Harbour and was one mile upstream from Passage West when, at 8.35 a.m., at least two men opened fire on her from a range of about 400 yards using 0.303 or similar calibre rifles. About 10 rounds were fired but, I am glad to say, there were no casualties. The damage sustained amounted to one bullet hole and one dent.

Captain Orr: What have the Eire Government to say about this? Who were the men?

Mr. Mayhew: We have mentioned this to the Eire Government but I think that it is too minor an incident to expect a protest. [HON. MEMBERS: "oh."] A police cordon was set up to try to capture the two men but failed to do so, and we therefore do not know their names.


Nevertheless, we should keep this in perspective. The action was outrageous but the Navy has faced more difficult engagements than this.

Mr. Hay: Can the hon. Gentleman confirm or deny that there is no connection between this act and the 15 per cent. surcharge?

Mr. Shinwell: Has my hon. Friend considered that it might be useful to have a declaration of war on Eire in order to satisfy Ulster?

Mr. Mayhew: We must hope that the shooting would be better than missing a ship at 400 yards eight times out of ten.

Service Ministers (Responsibilities)

Mr. Wingfield Digby: asked the Secretary of State for Defence in what way he has now widened the responsibilities of the three Service Ministers on an inter-Service basis.

Mr. Healey: As the Prime Minister stated in answer to a similar Question from the hon. Member on 10th November, the Minister of Defence for the Army also acts as Deputy Secretary of State and has a particular responsibility in the field of defence questions affecting the alliance as a whole. The Minister of Defence for the Royal Navy takes special interest and concern in personnel and logistics problems, and the Minister of Defence for the Royal Air Force co-ordinates defence budgets and the field of defence research, development and production. Each Minister retains as his prime function the management of his separate Service.

Mr. Digby: Is the right hon. Gentleman aware that, since the Prime Minister made that statement, there have been fresh reports in the Press that further changes were being made? Will the right hon. Gentleman deny them now?

Mr. Healey: I am not responsible for any reports in the Press. On the other hand, I can repeat what I said earlier—that I do not regard the present reorganisation of the central staffs of the Defence Department as being final, and no doubt changes will be made from time to time.

Sir Maitland: Is there any procedure to make one Minister responsible

for the housing arrangements of all the Services? If so, which Minister?

Mr. Healey: No, Sir. I specifically used in my Answer the phrase "interest and concern" rather than the word "responsibilities" in referring to the rôle of my hon. Friend the Minister of Defence for the Royal Navy and his relationship to personnel and logistics, for it is not possible to establish Ministerial responsibility in a certain aspect until the official organisation below him has been arranged to fit such a responsibility. But, of course, it is my hon. Friend who, at the Department, takes a particular interest and concern in this aspect of the Services.

Commander Courtney: Is it the interest and concern of the Minister that, although there is a 53 per cent. re-engagement rate in the Navy, there is still insufficient accommodation for married couples?

Mr. Healey: The Government are conscious of the fact that the provision of adequate married quarters is one of the keys to an adequate recruiting and re-engagement rate.

Burtonwood Air Base

Mr. Heffer: asked the Secretary of State for Defence in view of the fact that the United States Air Force are to leave the Burtonwood Air Base, what plans he has for its future other than for exercise purposes by the Royal Air Force.

Mr. Milan: We were told by the United States Air Force recently that the Burtonwood base will be handed back to the Royal Air Force on 30th June, 1965. We are now considering its use after that date.

Mr. Heffer: Is my hon. Friend aware that there is considerable feeling that this base could be used for peaceful purposes and integrated into the air development schemes for the North-West?

Mr. Millan: As I have said, we are considering the further use of the base but it is too early to make a definite announcement about it.

Mr. Eldon Griffiths: Does the hon. Gentleman agree that the purpose for


which the United States Air Force has used the Burtonwood Base is a peaceful one?

Mr. Millan: Indeed it is.

Mr. Tilney: Would the hon. Gentleman bear in mind that Burtonwood provided substantial employment for a number of residents of Liverpool?

Mr. Millan: We have that very much in mind. About 300 civilians are employed there now and about 50 will be offered alternative employment with the U.S. Air Force at Ruislip. Most of those who are established will, we hope, be able to accept alternative employment elsewhere. The staff as a whole are being informed today about their prospects after the base is closed.

Shackleton Aircraft

Mr. Goodhew: asked the Secretary of State for Defence when he expects to receive replacements for the Shackleton aircraft of Coastal Command; and what aircraft these will be.

Mr. Healey: I have nothing to add to the Answer I gave on 16th November, 1964.

Mr. Goodhew: Is there not an urgent need for replacement of this aircraft? Is the right hon. Gentleman aware that this matter was in the minds of the previous Government and that it is essential for the Services to have a decision at an early date? Is he further aware that it is also in the interest of our own aircraft industry that we should know whether this aircraft will be built here or abroad?

Mr. Healey: I am reviewing the content of the defence programme, including the question of replacing the Shackleton, and I am not prepared to go beyond that statement at the present time.

Mr. A. Royle: Is the right hon. Gentleman considering the purchase of a foreign aircraft as a replacement? Will he answer "yes" or "no"?

Mr. Healey: It would not be fair to list the aircraft we are considering but they include all those which may conceivably meet our requirements.

R.A.F. Station, Marham

Mr. Derek Page: asked the Secretary of State for Defence what is to be the future use of the Royal Air Force Station at Marham, Norfolk.

Mr. Millan: The Royal Air Force will need to retain Marham as an active flying station as far ahead as can be foreseen.

Mr. Page: Is the hon. Gentleman aware that this will bring relief to civilians employed in the area, particularly in view of the rumours during the election campaign which suggested that the base would be closed?

Mr. Millan: Those rumours had no foundation in fact.

Women's Services (Personnel)

Mr. Clark Hutchison: asked the Secretary of State for Defence what steps he is taking to secure a high rate of retention of personnel in the women's Services; and if he will make a statement.

Mr. Mayhew: We are starting a bonus scheme for this purpose. Those who enlist for six years and serve the full period will get a taxable bonus of £130. Those already serving on a shorter initial engagement will be able to qualify for a taxable bonus of £65 by extending their service for two years. The scheme does not apply to officers.

Mr. Clark Hutchison: Will the hon. Gentleman look at this again? I think it refers to cases where women in the Services do not get married—which may be contrary to public policy.

Mr. Mayhew: From my point of view, marriage is a great bugbear. It takes our people away. I am all for having a bonus which will encourage them to go the full length of their engagement.

British Army of the Rhine

Mr. Kershaw: asked the Secretary of State for Defence when he proposes to bring the British Army of the Rhine up to 55,000 men.

Mr. Healey: As my right hon. Friend the Deputy Secretary of State made clear in Bonn on 29th October, we accept this commitment, but the date must depend on our other overseas commitments and the rate of recruitment for the Regular Army.

Mr. Kershaw: What does that mean? Is the right hon. Gentleman aware that the uncertainty aroused by that Answer and by the pronouncements of the Chancellor of the Exchequer leaves us very much in the air? Is he further aware that the dangers outside Europe are very great but that the diplomatic necessity of staying in Europe makes it very desirable to do so? Where exactly do these inspired leaks come from? Do they not come from Chequers? Should not the Paymaster-General look into the question of how these reports came to be in the Press at the weekend?

Mr. Healey: The hon. Gentleman asked what my statement meant. It meant exactly the same as was meant by my predecessor in January and repeated by the then Seretary of State for War on 11th March last:
It remains our objective to reach a strength of 55,000 as soon as we can, dependent on recruitment and commitments in other overseas spheres."—[OFFICIAL REPORT, 11th March, 1964; Vol. 691, c. 412.]

Mr. Goodhart: Will the right hon. Gentleman look into the question of how it was that contradictory briefings were given to the Press? This has increased the confusion.

Mr. Shinwell: If we wanted to fulfil this commitment—which was not fulfilled by the previous Government—is it not essential that the West German Government should make a substantial contrition to the support costs?

Mr. Healey: I think that there is a general feeling on both sides of the House that our responsibilities in this respect would be easier to carry out if the West German Government were more prepared to help meet the cost in foreign exchange.

Mr. Thorneycroft: Will the right hon. Gentleman answer the question? Obviously, inspired briefings of the Press took place at the weekend. Almost every Sunday newspaper gave out the statement that B.A.O.R. is to be cut down and that statement must cause the very gravest concern everywhere. Can we not get to a stage where at least we have some statement about which rôles the Government are to keep and which they are to abandon?

Mr. Healey: With the right hon. Gentleman's experience in this office, he

will know how difficult it is to determine what the Press will say on any particular day on any particular subject. On the question of the priority of defence rôles which the Government intend to fulfil, I shall, of course, make my statement as soon as possible. The right hon. Gentleman consistently failed to give any guidance on this matter during his two years of office.

Mr. Michael Foot: Will my right hon. Friend bear in mind that many of us think that the commitment by a previous Government to keep a British Army of this size in Germany until the end of the century was one of the most irresponsible commitments ever made by a British Government? Will he also bear in mind that this view seems to have been upheld by the fact that the last Government were never able to carry out the pledge? Many of us on this side of the House would give him very strong support if he took up with our allies the question of reducing this figure very drastically to one commensurate with the country's economic position?

Mr. Healey: I take note of what my hon. Friend has said. Perhaps I can remind him that the commitment which right hon. Gentlemen opposite originally undertook to fulfil was considerably larger than that of the 55,000 men to which the present Government remain committed.

CONGO (BRITISH SUBJECTS)

Mr. R. A. Butler: (by Private Notice)asked the Minister of State for Foreign Affairs if he will make a statement about the safety of British subjects in the Congo.

The Minister of State for Foreign Affairs (Mr. Walter Padley): The rescue operation has been carried out with a large measure of success, but not, I am sorry to say, without casualties. As the House knows, the rebels had assembled several hundreds of hostages, and had repeatedly declared their intention to kill them when the counter-attack on Stanleyville began.
The greatest number of casualties was among the Belgian hostages, but Her Majesty's Embassy in Leopoldville has unhappily confirmed that, among the


British subjects for whose protection the Embassy are responsible, two have been killed, Mr. R. Latham, and Mr. C. Taylor, who is a New Zealand citizen. Four others are injured, Mrs. Mary Harrison, and Mrs. Joy Taylor and two of her children. The latter family are also from New Zealand.
Thirty British subjects are known to be safe and well. Between 40 and 50 others are believed to be in the territory to the north and east of Stanleyville, but no reliable news about them has yet been received. The above figures do not include Canadian citizens, who are under the protection of the Canadian Embassy in Leopoldville.
In addition, about 200 Indian and Pakistani citizens and British subjects or British-protected persons of Indian and Pakistani origin have been safely evacuated from Stanleyville to Leopoldville. The Government are making arrangements for the welfare and evacuation of our nationals as quickly as possible. One party has already been flown by the Royal Air Force from Leopoldville to Nairobi.
While the Government deeply regret the loss of life among British subjects and others, it is clear that had the rescue operation not been carried out there would probably have been a massacre of both European and other civilians on an even more appalling scale than has happened so far. We have expressed our warm thanks to the Belgian and United States Governments for their contribution to the saving of so many lives.

Mr. Butler: I am sure that the House will be obliged to the hon. Gentleman for his statement of facts and will endorse what he has said about our gratitude for the rescue operation, gratitude which we expressed earlier. What I am anxious about is the future, and I am sure that I carry with me a lot of feeling in the House.
Can the hon. Gentleman tell us whether, through the United Nations, or the Secretary-General, or through the Red Cross, or the Organisation for African Unity, or in any other way, he can give the House any reassurance about the future safety of British citizens in the Congo who at present, as he has stated, are in rebel areas?

Mr. Padley: As the right hon. Gentleman knows, prior to the launching of the rescue operation, Her Majesty's Government sought the co-operation of the Organisation for African Unity and sought the entry of Red Cross units. Her Majesty's Government will continue to be vigilant and to do everything possible, but I should like to emphasise that, as the British nationals are at present scattered, it would be impracticable to mount a paratroop rescue operation comparable with that which descended on Stanleyville.

Mr. Sydney Silverman: Has my hon. Friend's attention been drawn to reports, notably in The Times, of indiscriminate slaughter committed by the rescue party on landing in and around Stanleyville? Has he made any inquiries about this and, if he has not done so, will he do so? Will he bear in mind that while many of us would support the intervention of any means designed to rescue people in danger of being massacred, we are not in favour of intervention in the internal affairs of the Congo?

Mr. Padley: My hon. Friend will have noted that the paratroops have been withdrawn. A civil war is raging in the Congo and it was necessary for Britain and her allies to effect this rescue operation. I have no confirmation of the reports which my hon. Friend has mentioned.

Sir C. Mott-Radelyffe: I appreciate the extreme delicacy of the position; but would not the Minister of State agree that the Government cannot entirely wash their hands of all responsibility for the 40 or 50 British subjects and their families in an area where law and order have completely broken down? What the House wants to know is what action the Government are taking now to see whether anything can be done to effect a second rescue.
This is not a question of days, but probably of hours. It is very urgent. Would the hon. Gentleman undertake to make a further statement to the House this time tomorrow, or even sooner, if he has further information? I beg him to realise that the Government must not just sit back and do nothing.

Mr. Padley: Her Majesty's Government have no intention of sitting back


and doing nothing. Right from the beginning we have been active in this matter, as has been proved by events. The hon. Gentleman can rest assured that we shall remain vigilant and that anything which is practicable will be done.

Mr. Driberg: Is it not one of the lessons of this whole tragic business that a number of nations, European, Asian and African, should allocate standby forces for immediate use by the United Nations when rescue operations, or other emergencies of this kind, occur? Is my hon. Friend aware—I am sure he is—that the Scandinavian countries and Canada already have some standby forces in being, or are making arrangements to have them?

Mr. Padley: As my hon. Friend knows, Her Majesty's Government are of the opinion that the peace-keeping forces of the United Nations should be strengthened. It would certainly be desirable to involve troops of all nationalities in the United Nations peace-keeping forces. One day, we might be able to rely on the United Nations. Meanwhile, this operation was vital.

Sir P. Agnew: In the event of the still-scattered British nationals in the northeastern part of the Congo being rounded up by the rebels and brought to a place of temporary confinement, and that coming to the knowledge of Her Majesty's Government, will Her Majesty's Government consider sending in a force of British paratroops to rescue them?

Mr. Padley: In common with other Ministers who have stood at this Box, I find it difficult to answer hypothetical questions. Her Majesty's Government will take all necessary and practical steps to defend British subjects in the Congo and everywhere else.

ADEN (BOMB INCIDENTS)

Mr. Fisher: (by Private Notice) asked the Secretary of State for the Colonies whether he has any statement to make about the recent bomb incidents in Aden.

The Under-Secretary of State for the Colonies (Mrs. Eirene White): There have been at least 11 such incidents during the past six weeks, seven of

which have occurred on and since 26th November, when my right hon. Friend left this country for Aden. They have resulted in the deaths of two British Service men and injuries to 34 other people.
Investigations into the responsibility for these incidents are not yet completed. Two men have been detained for questioning in relation to the throwing of two grenades into a cafe on Saturday night. Meanwhile, as a precaution against further acts of violence local bars and cinemas have been placed out of bounds to British Service men, and security patrols have been increased in the areas occupied by them and their families.
Reports from Aden show that the arrival of my right hon. Friend has been welcomed by all the main political parties in Aden.
The House will, I am sure, wish to condemn these outrages and to extend sympathy to those who have suffered injury and to the families of the men who have died.

Mr. Fisher: We on this side would also like to express our sympathy with the relatives of the two British Service men who lost their lives and to those who were wounded.
As this series of bomb incidents appears to have been organised, can the hon. Lady say whether any particular organisation is thought to have been implicated? I have in mind the possibility that the Egyptian-sponsored and Yemen-based organisation which calls itself the National Front for the Occupied Yemen South may have been involved. Have any of the assailants been positively identified? If not, is it thought that there is sufficient evidence to bring those arrested to trial? Lastly, has the hon. Lady any further specific measures in mind, both political and military, to guard against further incidents of this kind?

Mrs. White: We have no positive proof that the so-called National Liberation Front is involved, but we have every reason to suppose so. This opinion is reinforced by the claim of the official news agency in Cairo last night of credit for these outrages. Our Ambassador in Cairo has been instructed to take up this matter with the United


Arab Republican Government as a matter of urgency. We do not yet have sufficient evidence to bring anybody to court. My right hon. Friend is having discussions on the political situation at this very moment.

Mr. Biggs-Davison: Is the hon. Lady aware that, according to the report on the B.B.C. news yesterday, her right hon. Friend the Secretary of State for the Colonies described this bomb outrage, which he certainly deplored, as unnecessary? Could she explain what was meant by that? If the report was untrue, could we please have a denial, because it seems to be a very unfortunate word to use?

Mrs. White: I believe that the actual words of my right hon. Friend were "brutal" and "useless". In other words, he was pointing out very forcefully that we do not negotiate by bomb.

Mr. Sandys: Having regard to the fact that the Federal Government have constitutional responsibility for internal security, may we be assured that Her Majesty's Government will give the Federal Government all possible support in carrying out their task of maintaining law and order?

Mrs. White: Yes, certainly.

CONGO (BRITISH SUBJECTS)

Mr. Fell: I beg to ask leave, Mr. Speaker, to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a definite matter of urgent public importance, namely,
the need for Her Majesty's Government to take immediate steps to secure the safety of British subjects remaining in rebel-held territory in the Congo now that the rescue operation by Belgian troops has been abandoned.
I will take but a moment of the House's time to emphasise the need for a discussion on this matter simply by saying that it is quite apparent from discussion in the House earlier this afternoon that this matter is regarded as one of public im-

portance and as definite and urgent—on both sides of the House.
I hope, Mr. Speaker, that you will be able to grant me leave to seek the Adjournment of the House.

Mr. Speaker: The hon. Gentleman asks leave to move the Adjournment of the House pursuant to Standing Order No. 9 for the purpose of discussing a definite matter of urgent public importance, namely,
the need for Her Majesty's Government to take immediate steps to secure the safety of British subjects remaining in rebel-held territory in the Congo now that the rescue operation by Belgian troops has been abandoned.
I should like to express my sense of obligation to the hon. Gentleman for giving me warning of his intention to make this application so that I could consider the matter in advance, because I realise that there is a great deal of anxiety about it. I cannot accede to his application. I take the view that it does not come within the Standing Order because this is really a continuing situation. I cannot regard the fact that the paratroops have now been removed as making it into a single specific matter for the purposes of the Standing Order.

Mr. Fell: While I fully realise that you, Mr. Speaker, do not, I am sure absolutely rightly, admit of discussion of a Ruling of this sort, may I say that there is a new situation in so far as the last Belgian paratroops and the last planes left, according to all the information that one can get hold of, today. Therefore, a new situation has arisen to the extent that the lives of British subjects, and indeed of others, are now suddenly more greatly endangered than ever. They have no hope unless something is done.

Mr. Speaker: I much appreciate the point which the hon. Gentleman makes. It was the subject on which I was most concentrating my attention when I considered the matter. I cannot depart from my Ruling, because I believe it to be right under the Standing Order.

Orders of the Day — FINANCE BILL

Considered in Committee.

[DR. HORACE KING in the Chair]

3.47 p.m.

The Chancellor of the Exchequer (Mr. James Callaghan): I beg to move,
That the Bill be considered in the following order: Clauses 1 to 4, Schedule 1, Clauses 5 and 6, Schedule 2, Clauses 7 to 9, Schedule 3, Clause 10, Schedule 4, new Clauses and new Schedules.
This procedural Motion proposes that the Schedules should be considered immediately after the Clauses to which they relate. This has been the practice in recent years. We certainly found it convenient when we were in opposition. If hon. Members opposite would care to continue the practice, it would certainly be the desire of the Government that we should do so.

Question put and agreed to.

The Chairman: May I say, especially for the benefit of new Members, that I have followed the excellent practice of my predecessors. I have had placed in the "No" Lobby a list of Amendments which have been selected and the proposed groupings of some of those Amendments. Hon. Members will find that of advantage if they want to find their way through the various debates during the Committee stage of the Bill.

Clause 1.—(CHARGE OF INCOME TAX FOR 1965–66.)

Question proposed, That the Clause stand part of the Bill.

The Chairman: Before I call the right hon. Member for Berwick and East Lothian (Sir W. Anstruther-Gray), may I take the opportunity, which I welcome, of paying tribute to him, on behalf of the Committee, for the able, devoted and distinguished services which he rendered as Chairman of Ways and Means throughout the last Parliament. Sir William Anstruther-Gray.

Hon. Members: Hear, hear.

Sir William Anstruther-Gray: I thank you for those very kind remarks, Dr. King. You make me all too conscious of the fact that, going back for a period of five years, this is a maiden speech for me to make.
I wish to draw to the attention of the Chancellor of the Exchequer a point which is far-reaching in its consequences. It is the effect, as I see it, of the increase in the standard rate of taxation on the brain drain of the most able young men in the country who, in many cases, are going overseas to complete their industrial training.
I had a letter only this morning from a friend of mine who is studying at the Institute of Advanced Technology at Boston, Massachusetts. This is what he says:
What worries me for the long term is to see over here the large numbers of British students at places like this and at Harvard who are swiftly becoming completely fed up with the idea of returning to Britain ever. From their point of view, why should they? They can expect to be earning up to £10,000 a year without having all of it taken away in tax. The cost of living, unless you spend all you earn going to theatres and restaurants, is in fact no higher here than at home, and they can earn a very decent salary if they stay on in education.
We ourselves will come back, but an awful lot of people who ought to be in Britain will stay out here, and I am sure that we have got to attract these people back to Britain instead of keeping them away. The demand for the limited number of people with the Ph.D degree greatly exceeds the supply, and we will have to recognise eventually that a man's brains are the easiest and the deadliest capital export that our country can possibly make.
I am so glad to see the Chancellor of Exchequer nodding at that. I am sure that he has got the point. I need not underline it further, but do let him, please, when considering Budgets, take note of it and not raise too lightly the general standard rate of Income Tax.

Dr. Jeremy Bray: I intervene only to answer the point made so eloquently by the right hon. Gentleman the Member for Berwick and East Lothian (Sir W. Anstruther-Gray). As, perhaps, rather more belonging to the category of persons involved in this, I am quite persuaded that this is not an important influence on the brain drain. Nor is it an important influence on the use of these people in the


British economy. Rather, this class of person is being exploited by hon. Gentlemen opposite, who know very well that it affects far more greatly members of the public who are paid vastly more than scientists and engineers in Britain.
This is a matter where the people concerned must be given opportunity to use their special abilities, and certainly they must get the rewards, but the rewards to this kind of person depend primarily on their rate of promotion, on the rate of expansion of industry. It is to secure this that this Committee is now seeking to put through a Finance Bill to make sure that that expansion does continue, instead of being throttled in the way in which it was under the previous Government.

Sir Henry d'Avigdor-Goldsmid: I am very pleased to see sitting on the Government Front Bench the three Treasury Ministers, because I remember that all of them have been rather eloquent about the disadvantages of a high Income Tax. I think that the Chief Secretary went to great lengths, one or two Budgets ago, to assure us that the basis of taxation was too narrow and that the rates were too high. That was before this new rate which his right hon. Friend the Chancellor has brought in. I am bound to say that, though I had expected to disagree with the right hon. Gentleman on most of his measures, I did not expect that on Income Tax his views would change so quickly as they evidently have done.
The basis which the right hon. Gentleman, in his Budget speech, claimed for the prospective rise in Income Tax—and I shall be coming back to the word "prospective" later—was that it was to be a measure of social justice in paying for pension benefits which were also foreshadowed in that speech. What I should like to look at rather closer is how far these matters were directly allied.
One of the things which is too often slurred over, but which we cannot make too clear, is that of the 6 million people of pensionable age who will benefit from the proposed legislation l½ million who are the neediest and depend on the National Assistance Board to reinforce their pensions will not themselves directly benefit from the pension proposals. They will eventually benefit through the Assistance Board proposals. If it was a

matter of raising the Board's scales—and I for one would not argue about that; no one who lives in political life can fail to appreciate how very deeply poverty bites in that section of our population—the actual cost of raising the scales is the relatively modest sum of £23 million.
If we add to that the prescription charges, which will cost another £22 million, it would appear to be £45 million which has to be raised to keep the amount of funds at public disposal, roughly speaking, level with what it was before the changes were made. Then we also have the petrol duty, which is to raise £93 million. Therefore, it seems to me at first glance that the £93 million petrol duty is more than enough to cover the actual payments to those in need and the amount of the prescription charges which the right hon. and hon. Gentlemen opposite did not put in their election address and have hurried to carry out.
So it does seem to me that we are engaged on a deflationary spiral, and, while it is entirely a matter for the right hon. Gentleman and his colleagues to decide whether they want to do that or not—they are in the position of giving the orders—I would say they were not brought forward in any way as an avowed and deliberate act of deflation; rather the Government obscured the position by indicating that the proceeds of the imports surcharge of £200 million would be taken as inflating the economy to that extent.
I really wonder how far this is an accurate assessment. After all, this is not a revenue duty, this £200 million; it is a duty to discourage imports, and we really have no idea how much of it will be carried out by what companies spend abroad, or how it will result, and to what extent, in reducing prices for our exports, and we do not know how much we shall save as the result of it in the imports world. We shall have a chance of discussing it at considerable length in the next two or three days.
It would seem to me quite fanciful to put the figure at more than the extra purchasing power going into the economy as the result of the pensions and assistance proposals, whereas, on the other side, it would seem that the export rebate of £75 million is going into the coffers of companies which, in most cases, have done


their exporting and are, therefore, getting £75 million extra. I think that one could add it up and say that the £75 million represents the amount of the Assistance Board scales and the prescription charges. I really wonder why it is necessary to increase the Income Tax, and particularly to increase it in advance.
If one studies the population statistics, as I recently had the opportunity of doing, one finds the very surprising and interesting fact that the number of children in this country is growing—due, no doubt, to 13 years of life under Conservatism—and the number of old people is increasing because, of course, of the improved medical care for which we can also take the credit; but the working population is continuously being diminished.
4.0 p.m.
The figures in the Registrar-General's Statistical Review of England and Wales for 1962 are very striking. As of now, the under-15s represent 22·6 per cent. of our population, and the people normally retired from work, that is to say, men over 65 and women over 60, 14·9 per cent., making a total of 37·5 per cent. The working population, therefore, represents 62·5 per cent., or, to put it another way, the ratio of the working population to dependants is 5 to 3.
I do not particularly want to inflict all these statistics on the Committee, but they are all in the Registrar-General's Review. According to his forecast, in 1967—which is not very far off—the proportions will have grown to 38·8 per cent. for dependants, to 61·2 per cent. for the working population. In other words, the proportion of the working population to dependants will be about 3 to 2, which means that every person at work will be responsible for two-thirds of a dependant. By 1972, the proportion of dependants will have risen to 40·4 per cent. This is not allowing for the effect of the increase in the school-leaving age. My suspicion, therefore, is that by 1972 the proportion of dependants to working population will be rather more than 2 to 3.
This is a continuing tendency. Why is it necessary, therefore, to fasten round the necks of the productive part of our population this extra impost and extra discouragement? Let us not forget that the cost of the pensions increases, in the

stamp alone, will be 5s. 3d. for every man in work, and 4s. 7d. for every woman. These are direct burdens on people who are doing the work and producing the goods by which we live and which we hope to export.
These direct burdens which are being fastened on them have a largely illusory benefit. It is largely illusory, because this will not directly benefit the poorest part of the population. No one is so hardhearted as to say that it is not right that the 6 million taxpayers who are to bear the tax should not be willing to pay tax to benefit the 1½ million people who are really in need—I think that we as a country accept that—but what I say most inequivocally is that a tax on everybody who is at work for the benefit of 4½ million people who are not themselves of the neediest is a tax at which we ought to look very carefully indeed.
The Chancellor of the Exchequer said in his Budget statement that he intended to avoid any retrospection in his legislation, but I wondered whether he did not indulge a little too much in a policy of prospection. I cannot help feeling that adumbrating and imposing taxation in advance—as I think he has learnt over the last 10 days—can have severe disadvantages indeed. This is not the time and place to make more of that point, but it is clear that over the last fortnight what we have been suffering from is not too little information, but too much information, and too much misleading information.
The tax rate which it is proposed to impose will not be effective until April, 1965, always supposing that there is not a General Election before then. I do not know whether the right hon. Gentleman will then think it appropriate to reduce or increase that tax. I cannot understand how he is in a position to fix that rate firmly for April of next year, when the whole economic situation is in its present state of mistiness, and when the proposals which he has adumbrated are in such vague terms, and I doubt whether his reasons for imposing this tax are purely economic at all.
As Chancellor of the Exchequer, it is his duty to impose taxes to meet our economic requirements. I do not consider—and I do not think the Committee


would, either—that it is his duty to impose taxes for anything other than taxation reasons. I think that forecasting an Income Tax rate to be effective only from April of next year is going against the right hon. Gentleman's own principles, because he does not like higher Income Tax, and he has been very eloquent in telling us the faults of it. I think that he is giving one extra hostage to fortune. Over the last three weeks we have seen many massive hostages given to fortune. I hope that this is one which we might reconsider, and that my right hon. and hon. Friends will do their best to see that this tax is strangled here.

Sir Alexander Spearman: I do not take the view that because we are in opposition we ought automatically to attack everything the Government do, particularly as they give us so many legitimate opportunities of doing so. Therefore, I do not criticise them for raising taxes.
In spite of what right hon. Gentlemen said when they took office, and have repeated since, I believe that for some time there has been excessive pressure of demand, which has meant that imports have been sucked in, and exports have been diverted. In an open economy such as ours the first effect of excessive pressure is on the balance of payments, whereas in a closed economy the first effect is on prices. In the long run, it comes to the same thing. Since they have been in office the Government have done a good deal to increase the excessive pressure of demand. It seems to me, therefore, that they have to ensure that they spend less, or that industry spends less on equipment, or that consumers spend less.
Some of my hon. Friends may make the case that the Government need not have imposed this tax, because they could have saved the money by avoiding waste in their own Departments. I am sure that there is a good deal of waste in Government Departments. I think that this is inevitable with huge bureaucratic set-ups. This is one reason why so many of us are against nationalisation. However, I do not believe that it is practical to cut down Government expenditure, by getting rid of waste, sufficiently to deal with this situation.
We all agree that we do not want the social services to be cut. In recent years industrial investment has forged ahead, particularly as a result of the wise stimulation provided by my right hon. Friend the Member for Barnet (Mr. Maudling), and no one would want to see that cut back. Therefore, there has to be some cut in consumer expenditure.
If the Chancellor wants to reduce consumption for a time, why does he not tax spending rather than producing? We want to encourage production as much as possible. A Government in an authoritarian State can do almost everything except make people happy, but a Government in a free society must vigorously use both the stick of competition and the carrot of reward. This tax will penalise the very people whom we want to encourage to work harder.
The agreed object of us all is to raise the general standard of living. In the old days people took the view—it is now completely out of date—that that could be done by a redistribution of existing wealth. We now know that it is no good giving people extra money if the goods are not there for them to buy at a reasonable price. We know that the only way in which we can raise the standard of living and the standard of the social services is by raising the national income. That means stimulating production, and it demands a greater and not a lesser differentiation in rewards.
If there is one thing more than another which damages our chances of attaining our agreed object of raising the standard of living it is the Government's obsession with equality. I remember hearing Lord Waverley—then Sir John Anderson—make a most impressive speech, a long time ago. I do not believe that the Chancellor of the Exchequer was here. Lord Waverley put just what I want to say so infinitely better than I can put it that I want to quote from a speech he made on 24th October, 1945. He said:
My study of the natural sciences has taught me that, in order that energy may expend itself in useful work it is necessary that there should be inequality—inequality of pressure, of temperature, of electrical potential. Unless you get inequality, no work is done. May not something similar be true in human affairs? May not equality, if we could achieve it, which we never shall, make for stagnation? … I would say … that economic inequality, from a national point of view, is not an evil thing but is positively good, subject to


two conditions. The first is that the lowest level is not too low by whatever standard of human needs is judged reasonable. The second condition … is that the higher levels are attainable to all, as rewards of character, ability and enterprise".—(OFFICIAL REPORT, 24th October, 1945; Vol. 414, c. 2022–37.]
I believe that Sir John Anderson, as he then was, was one of the wisest and greatest men who have been in this House for the past 25 years. What is more to the point, I believe that the last Labour Prime Minister and most of his closest colleagues would take that view. I ask the right hon. Gentleman to bear in mind that it is not always the hastiest traveller who arrives first.

Mr. Geoffrey Hirst: It is quite exciting to be able once again to take part in finance debates from this side of the House. For many years I have been an unlicensed rebel. I have now become entirely respectable, but I will not pursue that point. I agree with all the speeches which have been made from this side of the Committee. The point has been made admirably. I am, naturally, disappointed, Dr. King, that you were not able to select the Amendment in my name, but I may be able to refer to it in general terms on the Question, "That the Clause stand part of the Bill."
I support what was said by my right hon. Friend the Member for Berwick and East Lothian (Sir W. Anstruther-Gray). Contrary to what was put forward by the hon. Member for Middlesbrough, West (Dr. Bray), my right hon. Friend was absolutely right in saying that increased taxation of this character is a disincentive, in that it frustrates and makes fed up those in higher management and in science. It must add inevitably to the brain drain that we have heard so much about.
But its effects are felt lower down the scale. Admittedly, some of the people of whom we have been talking are well salaried, and are more interested in Surtax rates, but there are vast numbers of our people in the lower groups who are now fighting their way up—clever young men, with good degrees, who are coming along into the management classes, and into our professions and into science—who are earning rather less than the highest salaries. They are earning up to £2,500 a year.
4.15 p.m.
It is those people who feel very disturbed at the proposed alteration in the standard rate, which they were not warned about in the General Election. I know that many of these people in my constituency are very angry about it. The Conservative Party has been disappointing to some of them, and they thought that Labour, with its brave new world, would do better for them. Now their feelings have changed.
I do not want to say anything which may be regarded as sour grapes, provided that this situation can be put right. That is why, through my Amendment, I was attempting to find some way of touching on the problem. Although my Amendment has not been selected, I hope that the Chancellor will have something to say about this matter. The partial relief which I am advocating would help that very important element in our society of which I am speaking. The idea is that approximately the first £1,300 of taxable income should remain taxable at the old rate of 7s. 9d. in the £. They would pay the new rate of 8s. 3d. only on the income remaining after that.
I know it can be argued that the sum involved is not very great. That always can be argued. But if a little bit is added to another little bit, and so on, it acts as a disincentive and a discouragement, whereas we must encourage people to feel that if they achieve the promotions that we have been told about by hon. Members opposite they will not be penalised. They are being penalised, and that is why I deprecate the change in the rate. I am against it in general, but it would not be reasonable to go over the whole ground, much of which was done in the Second Reading debate. I wanted to refer particularly to one important sector of the economy where keen disappointment is felt. I can understand and sympathise with that disappointment.
I am glad that my hon. and gallant Friend the Member for Harrow, East (Commander Courtney) is here. I hope that he will be able to say a word in this discussion. I am associated with him in another important matter which affects many people, namely, those who want to feel able—and it is a highly social and desirable thing that they should be able—to make some contribution to help their parents and elderly dependants.


They are exactly the sort of people who will be hit by this provision.
I have had many associations with the Chancellor of the Exchequer in Finance Bill debates in recent years, and I hope that he will not disappoint me entirely today, otherwise, my smile will grow rather thin as the days and weeks go by.

Mr. Harold Lever: We can all say that our principles have come to a fairly close approximation, as expressed in general terms by hon. Members on both sides of the Committee. The difficulty is that when we consider the practical applications of those principles we reach different conclusions. The hon. Member for Scarborough and Whitby (Sir A. Spearman) pointed out that egalitarianism, or a tendency to equality by a redistribution of tax rates, led in the direction of stagnation. If egalitarianism leads to stagnation, the Conservative Party must have a considerable record in egalitarianism, certainly in recent years.
Are we to infer from that that once we have established rates of tax they are to be regarded as sacrosanct, and that there should be no readjustment of the burden as between one section of society and another? If the Labour Party has any purpose it is to redress the balance struck by purely economic means in the nation's allocation of the wealth which we produce.
In saying this, I do not dissent from the general proposition advanced by the hon. Member for Scarborough and Whitby that the road to greater wealth for us all is an increase in the total to be distributed, rather than an assessment of the correct redistribution of what exists at the moment, but I would point out that even a physical redistribution of our present wealth may play a part in creating greater wealth for all of us.
I venture to think that my right hon. Friend the Chancellor had that in mind when he produced this Income Tax change. What he was seeking to do was to see the trade union movement and the working people join with a Labour Government in seeking an incomes policy. He was seeking to have a fair-

minded view in apportioning the national wealth and it was not going to be as one-sided a view in that apportionment as that of the Tory Government. One of the handicaps of that Government in getting a wages and an incomes policy was, of course, that the Tory Government were unable to wean or win the confidence of ordinary working people in the trade union movement.

Commander Anthony Courtney: rose—

Mr. Lever: If the hon. and gallant Gentleman wishes to intervene, I am always most generous in allowing interventions.

Commander Courtney: Is it not true that about 3 million people in the trade union movement are known to have voted for this side of the House?

Mr. Lever: Of course. That is why our task is to enlighten them and bring them to a true understanding. I happen to be one of those who do not believe in the one-party State and, therefore, it is perfectly natural that although I may not hold their view to be right, I do not altogether think that those who hold the contrary view are in the deepest pit of outer darkness. I am not in the least surprised by the well-known statistic which the hon. and gallant Gentleman quoted.
To go back to the real meat of the matter, it is that the majority of the trade union movement have not been satisfied by the action of the Conservative Government, that they have not sufficiently warranted confidence on their part to win from their own members the maximum support for an incomes policy. Now that the Conservative Party is in opposition it can indulge in the natural reflexes irresponsibility which has been so irritatingly held in check for the last 13 years. We wish to leave them in this condition for quite a number of years to come.
The right hon. Member for Barnet (Mr. Maudling) who, throughout his period of office has been, I hope with sincerity, urging an incomes policy, sits cheek by amicable jowl with the right hon. Member for Wolverhampton, South-West (Mr. Powell), who tells us that this policy is a fraud and dishonest,


unattainable and in any case undesirable. I should like later to hear a little bit more about who is the true spokesman for the Conservative Party.

The Chairman: Order. If we did hear more about it, it would be quite out of order.

Mr. Lever: I hoped that I was in order, because what I wanted to say was that the reason for this Income Tax increase and for its earlier declaration in law was to show to the country as a whole that we mean to pursue our incomes policy with equity and fairness, which would be more encouraging to the majority of working folk in this land to accept the discipline of an incomes policy. I am not just quibbling for the sake of quibbling, or making a stick with which to beat the Conservative Party. I think this is relevant in deciding whether we agree to these increases, whether we think that this objective is a possible one.
If the right hon. Member for Wolverhampton, South-West is right, and the Conservative Government for the last several years are wrong, if an incomes policy is a fraud and a delusion, then we ought not to increase the Income Tax in this way perhaps, because that is one of the reasons for increasing it. I want to say in a sentence or two that I agree with what the right hon. Member for Barnet said when he was in a responsible position for several years in the last Government, that an incomes policy is possible. A perfect incomes policy has not been achieved so far, and I would agree with the right hon. Member for Wolverhampton, South-West that it is not likely that a perfect one will be achieved, not even under so perfect a Government as we are likely to develop. But the point is that there has been an incomes policy and that it has been effective to a certain degree, even under a Conservative Government, and had the trade union movement pushed to the limit of what it could have achieved in the way of wage increases from society, our economy and export position would be in a parlous situation—very different from the position we are in today.

Sir A. Spearman: Could the hon. Gentleman say where an incomes policy has worked? So far as I know, it has

failed in every country in which it has been tried.

Mr. Lever: That is only so if we regard an incomes policy as something laid down from on high and followed with mathematical precision by workers, employers and the Government alike. An incomes policy has been pursued in the sense that people have been urged not to press their monetary claims to the limit of their strength. I think it true to say that of the trade union movement. Throughout the years after the war, and especially in the more critical period of labour shortage, the miners, for example, restrained their demands for wages to something very much below what they could have extorted from society, out of a sense of creative patriotism and making their contribution to the efforts of the country under its then Labour Government to extricate itself from the dangerous position in which we found ourselves after the war.
What I want to say about this increase is that it is not a harsh increase, it is not an unjust increase, it is not an inappropriate increase to the situation in which the country finds itself, it is not an increase which should be resented as part of a general incomes policy. I wonder whether those who have to bear this increase are as small-minded or mean-spirited as is sometimes alleged. I think that a man with £3,000 a year and two children will pay very little more than 10s. a week extra in Income Tax. I am quite sure that many people in that situation will welcome the readjustment in the incomes position, which enables the Government, even in their hour of difficulty—I see smiles, but there are people; and I am sure that there are some in the party opposite—who are capable of making a modest sacrifice cheerfully for the sake of redressing the difficulties of people in a very much worse position than they are—the old people, the sick and the disabled and those who have served their country in the war.
I therefore say that this increase is justified, and that not only is an incomes policy not unattainable, but it has been partially achieved, though imperfectly. We hope that my right hon. Friend, in the measures that he outlines to the country, will have a greater success with his incomes policy that in the past. That is not to say that there has not been some


measure of attainment of an incomes policy already.
There is one other point I wish to make. It relates to the question of the effect abroad of this tax increase. The general assumption on the other side of the Committee—and, I am sorry to say, even on this side—is that the international bankers are waiting to pounce on the Labour Government unless they undertake to grind the faces of the poor in a satisfactory manner. Nothing could be further from the truth. Among the international bankers of this day and age are many enlightened people who recognise that whatever politics a Government may have an important matter is that they should play their part in advancing and continuously expanding the wealth of the free world.
The whole purpose of this policy is to put the Government's undertakings on a sound basis. What they do with the money from this policy is a matter strictly of their own concern. Since my right hon. Friend has undertaken these social policies he has shown a willingness to see that they are paid for. One way of paying for them is by Income Tax. There are other ways. In these circumstances, since members of the Conservative Party are always prating about the bad impact which we make abroad, it seems singularly eccentric on their part to deplore the fact that, in a most orthodox manner, my right hon. Friend is insisting that the good things we want for the old people have to be paid for by fiscal means.
While I cannot sing an enthusiastic song of appreciation about an increase in Income Tax, I unhesitatingly say that my right hon. Friend has done the right thing for the right reason.

4.30 p.m.

Commander Courtney: I always enjoy listening to the hon. Member for Manchester, Cheetham (Mr. Harold Lever). He put his case with such charm, as though he were positively enjoying the prospect of a rise of 6d. in the standard rate of Income Tax. I can assure the hon. Gentleman that in his enjoyment he is in a distinct minority among the people in the country.
I turn to a point which concerns me and take the opportunity to draw the

attention of the Chancellor of the Exchequer and the Committee to the possibility not perhaps of righting an injustice so much as doing justice to a section of the community which has not been thought of quite so much as some of us would like in connection with recent Budgets.
I refer to married couples, and also to bachelors and spinsters, who support, to a varying degree, elderly parents or other elderly relatives for which, in my submission, they receive totally inadequate recognition. Because of this, as my hon. Friend the Member for Shipley (Mr. Hirst) has mentioned, we put down an Amendment referring to the standard rate of Income Tax, but it was not selected.
It appears to us that not to, shall we say, encourage this support of elderly parents is, in a way to weaken the family tie which is, perhaps, a byproduct of the machinery of social legislation which has been carried out, with the support of Members of all parties, since the end of the war. We do a great deal for old people in these days. There are old-age pensions and supplementary pensions, granny annexes, homes for old people, the work done by the W.V.S. and the St. John Ambulance Brigade, the meals-on-wheels service—all sorts of things are added on to the practical benefits which they receive from the State as of right and from voluntary organisations.
I am sure that these things meet with the approval of all hon. Members. In my submission, what we have neglected are numbers of children who support elderly relatives. If there were more incentives, more people would do so and save the country money by a possible decrease in supplementary pensions and other benefits given to old people.
Statistics on which to base any fair assessment of the scale of this question are rather difficult to obtain. I have spent some time going into the Report of the National Assistance Board for 1963. It contains rather interesting evidence to support my point. Sticking only to weekly allowances of National Assistance, quite apart from grants given periodically in support of National Insurance, sickness benefits or whatever they may be, the


amount, in round figures, is £200 million which is paid to about two million people. It is interesting that about 68 per cent. or 1,333,000 of these people are of pensionable age.
My point, which has a direct bearing on the standard rate of Income Tax, is that over half of these, 68 per cent., approximately 733,000, share accommodation with other adults who are normally their sons or daughters. In fact, the families live together. The presupposition is that some measure of financial support comes for these old people from the sons and daughters. At a rough calculation, the cost to the Exchequer in respect of old people who are accommodated with sons and daughters, in the form of weekly allowances for National Assistance, amounts to about £75 million.

Mr. Ted Leadbitter: So that I may follow the hon. and gallant Gentleman correctly, may I ask whether he is saying that before the present proposals were made the old people were treated generously?

Commander Courtney: I am saying that the old people are being treated quite generously. They are certainly being treated generously by the State £75 million is a considerable sum of money. I am presuming that they are being treated well by their own children and, if the hon. Member will wait, I will develop that point.
For the purposes of this argument do not include the old who are supported by their children and are living away from those children. The only figures which I could find to support my point are those relating to expenditure on weekly allowances made to old people living with their children.
My hon. Friends and I were hoping to achieve two things by our Amendment. The first was to strengthen the family tie by doing justice to this class of people. It is a large class which feels the need and the duty to support parents and other elderly relatives. Secondly, to persuade more wage earners, young married couples, spinsters and bachelors, to do likewise and contribute more of their disposable incomes to the support of the old people.
With the figure of £75 million in mind it would surely seem that by making this concession, and by not increasing the

standard rate of Income Tax in respect of that portion of income allocated to the support of old people, the Treasury might reap a corresponding benefit from a reduction in the amount of National Assistance given to these same old people. It is very difficult to work out the figures.
The right hon. Gentleman has facilities which are denied to hon. Members on these back benches, but it seems that a great social advantage might be gained and hon. and right hon. Gentlemen opposite, who continually bang the drum of social justice may now have indicated to them a sphere in which they could make some useful progress. An advantage could be gained with much less expenditure by the Treasury than we sometimes imagine.
This is a short Finance Bill and it has been difficult to raise this point except in association with the standard rate of Income Tax. But I ask the Chancellor to take note of the point. My hon. Friends and myself will be pressing this matter. I ask him to look at it now, because when the April Budget is presented—it may well be, of course, that it will be presented by my right hon. Friend, but assuming that the present Chancellor is still in office—I hope that between now and then he will take a look at this matter, because it will be pressed by my hon. Friends and myself in relation to the next Finance Bill.

Mr. Raymond Gower: We listened with much enjoyment to the hon. Member for Manchester, Cheetham (Mr. Harold Lever) and to the way in which he supported the Clause. I wonder whether he emphasised the relationship between the Clause and his insistence on social justice during the last election. Did he and his colleagues express the view that a sine qua non of social justice was immediately to announce an early increase in the standard rate of Income Tax?
I wonder whether some people who listened to speeches made at election meetings would have taken that relationship so eagerly as the hon. Gentleman appeared to do today. That is the reason that the Chancellor need not feel surprised when we express some anxiety and concern about the tax. We were ill-prepared during the election campaign


for an impost of this nature. We were led to believe that our opponents, like the alchemists of old, had a major power of transmuting the economy and achieving all these beneficial results without having to increase taxes. That was the implication and, indeed, the expression of many of their speeches. Far from having to resort to an increase in taxation, they would be able to achieve all of these results out of an increase in production. Undoubtedly, this promise militated against us because we were unable with confidence to offer any similar benefit.
We are concerned about the increase, too, because it comes at a time when undoubtedly the Chancellor and his colleagues have a problem to face—a problem about which they knew during the election. They know that there has been a long-term problem in our economy ever since the end of the war, with a periodic imbalance of exports and imports and a tendency of our economy at periods of three or four years to show this imbalance in a profound manner. They knew all this and yet this Clause, with its promise of increased taxation ahead, does very little or nothing, to meet that problem.
Indeed, it may have the contrary effect, because nothing is more dismal or less likely to promote efficiency, as my hon. Friend the Member for Shipley (Mr. Hirst) said, than an increase of taxation; not only companies but individuals are depressed by the prospect that increased effort will lead to higher penal taxation. I would tell the hon. Member for Cheetham that it is not the amount or the proportion of the increase which raises this point, but the prospect. It is a dismal prospect which in many ways does not help the achievement of social justice or the achievement of some earnings policy.
I spoke to one of my constituents this weekend who is an employed person earning in the middle bracket of income. How has he been affected so far by the Government? He has to pay 2s. extra on his insurance stamp and he has to pay extra to get to and from work because of the petrol duty. On top of that he has the prospect, if he improves his income, of having to pay higher taxes. In three directions he has a dismal prospect. I submit respectfully to the Chan-

cellor and to the hon. Member for Cheetham that this is scarcely showing the man the gay new world which he was promised during the election.

Mr. Hirst: He knows now.

Mr. Gower: He may not. This may merely be the first indication.
We sympathise with the Chancellor in the long-term problem which successive Governments, starting with a Labour Government, have faced in post-war years. This problem is not easy of solution in an island such as this or in an economy such as ours, with its double problem of supporting 53 million people and acting as the banker to the sterling area. We are aware of this problem but we feel that this impost, far from helping in this difficult job, can be a hindrance. In many ways it can discourage those upon whose efforts we must call if we are to succeed.
I therefore join my hon. Friends in expressing concern about the nature of this tax, which we had no reason to expect and for which the Labour Party had ill-prepared us.

4.45 p.m.

Mr. Donald Box: I have returned recently from four weeks abroad with the Commonwealth Parliamentary Association delegation. During those four weeks I had the advantage or disadvantage, however hon. Members prefer to describe it, of not seeing more than three English newspapers. When I returned the first thing I had to do was to catch up with recent events, and I did this by examining the newspapers in the Library.
It was unnecessary for me to read the text. I had only to observe the changed expressions of right hon. and hon. Members of the Labour Government to understand what had been happening in the past four or five weeks. They started by being buoyant. They became less buoyant, and the smiles became a little forced. Finally, they were dismal and positively gloomy. This culminated in the events of last week, when the country was reduced to the utter humiliation of having to rattle the begging bowl round the bankers of the world to get us out of a very serious predicament.
Apart from the natural lack of enthusiasm which anyone feels about


the first rise in Income Tax in 13 years, I am opposed to this rise in tax for a number of reasons. First, it seems to me to be positively inflationary. If the tax were being raised solely to relieve pressure on our financial resources, it might be well and good, but, as I understand it, at least part of the revenue raised in this way is to be used to increase pensions and other social services. This seems to me to be the right action at the wrong time, for however worthy a rise in pensions may be at the moment, I cannot see how it can be other than inflationary by placing greater purchasing power in the hands of more people.
It therefore seems to me that, despite the Chancellor's assertions that he would not cash the cheques before the money was in the bank, he is already cashing cheques on the overdraft in this respect, and that it is a great pity that he did not decide to wait just a little longer so that the proposed increases in pensions could be more soundly based.
Secondly, as several hon. Members have said, this increase in Income Tax must surely have a disincentive effect on workers and on production. In recent years a vast new group of workers have entered the £1,000 to £2,000-a-year class. I refer to the steel workers, the chemical workers, the ship repairers, the coal miners, and even the bricklayers, because I understand that in the City of Cardiff a bricklayer will laugh at anyone who offers him less than £30 a week.

Mr. Joel Barnett: Nonsense.

Mr. Box: It is not nonsense. It is a fact. One of the big grumbles of these workers has been about the disproportionate amount of tax which has to be paid on overtime earnings. I believe that in some respects some workers will be deterred from making that additional effort by the higher tax.
The amount of work involved in printing and altering P.A.Y.E. and other tax scales, both in the offices of the Inland Revenue and for the army of unofficial tax gatherers in the offices of private and public companies, seems to be a very considerable burden. I recognise that the same thing applies when there is a reduction in Income Tax, but most hon. Members will agree that when there is a

reduction, there is at least some incentive to undertake the additional work. Are we to see these alterations take place again in the future, when perhaps in the spring Budget the Chancellor either increases the Income Tax further, or, we may hope, reduces it? It seems to me that a great deal of work is involved if these changes are to be frequent.
For these general reasons I cannot understand why the Chancellor did not use the regulator rather than a rise in Income Tax to obtain the necessary revenue. By doing that he would have got a far quicker return and the rise could have been confined to inessentials. This shows that he could have mopped up the necessary purchasing power without having any inflationary affects and such action might not have had such an adverse effect on savings. Perhaps the Chancellor has something of this sort in mind for a later date and will be using the regulator in addition to Income Tax.

Mr. Leadbitter: I am not sure that hon. Members opposite are clear about the argument they are adducing. One hon. Member opposite tried to make out a remarkable case for reducing the charge on the Exchequer arising from old-age pensions. He suggested that, by some means, the sons and daughters of the elderly could help old mum and dad and so reduce the heavy burden on the Exchequer. To that hon. Member I say, if you were—

The Chairman: Order. The hon. Member is now a full Member and must observe the rules of debate. He must address the Chair and must never address an hon. Member personally.

Mr. Leadbitter: If the hon. Member opposite who made that suggestion were to come to The Hartlepools or constituencies in the North-East, Merseyside and Scotland he would find that the average wage is about £12 a week and nothing like the £17 a week suggested by the Leader of the Opposition. To suggest that the average wage is so high shows a total lack of appreciation of the facts, and to say that the rise in Income Tax will hit the average worker is not accepting the first principles involved. Do I see hon. Members opposite wishing to contradict me? Does anyone deny this?

The Chairman: Order. I would suggest that the hon. Member does not invite interruptions. There are usually enough spontaneous interventions in our debates without hon. Members inviting them.

Mr. Leadbitter: I thought that the hon. and gallant Member for Harrow, East (Commander Courtney) was about to rise to contradict me when he was advised by one of his hon. Friends to sit down. To that extent I was really endeavouring to give way and not to invite an interruption. However, I appreciate that I must keep in order.
It should be realised by hon. Members opposite that the rise in Income Tax is related to the higher levels of earnings. The lower-paid workers will not be affected by it. As to the use of the regulator, if the hon. Member for Cardiff, North (Mr. Box) wants to help the old folk he should consider the extent to which the elderly would be hit by its increased use. I can assure him that the rise in Income Tax will have a smaller effect on them than would an additional use of the regulator.
Hon. Members opposite should not try to claim that people are suffering because of present rates of Income Tax, or that they will suffer more as a result of my right hon. Friend's proposal. Last weekend I made some inquiries to see how many people in my constituency would be affected by the Income Tax increase. I discovered that one needs to have a substantial salary indeed before the increase bites.
Whenever hon. Members opposite speak about my hon. Friends having got ourselves into a mess after such a short period in office they should realise that the right hon. Member for Barnet (Mr. Maudling) said early in this Parliament that the Labour Government had inherited his diagnosis and solution of a problem which had been created by his party. If ever a hasty statement was made, that was it. The judgment of the right hon. Member for Barnet is irrefutably clear and sound and had hon. Members opposite listened to him in June of this year the present Government would not have these difficulties to clear up.
It has been reported that a bad egg was laid during the first few months of this year. Perhaps that egg had to be

hatched during the past few weeks. I say that to show that it does not help the country if hon. Members opposite say in the House of Commons that they sympathise with my hon. and right hon. Friends, when in the corridors of power outside they are gloating their heads off. That is happening. I regret that the right hon. and learned Member for St. Marylebone (Mr. Hogg) is not in his place, because he has been gloating more than anyone about the predicament which hon. Members opposite created and which we are trying to solve. Frankly, I do not believe that hon. Members opposite have any real sympathy for us.
I suggest that my right hon. Friend the Prime Minister made an apt and proper claim when he said that there are two issues on which the House of Commons should be united; defence and the defence of the £. Hon. Members opposite have fallen far short of accepting the need to be united on those two points. Like the argument we had the other night about tied cottages, hon. Members opposite made it clear that they knew nothing—

The Chairman: Order. Defence and tied cottages do not arise on this Clause.

Mr. Leadbitter: I was likening the tied cottage to the argument we had the other night, Dr. King. I was showing the irrelevancies of the arguments used by hon. Members opposite. I have said enough to prove my point, except to mention that hon. Members opposite do not live in tied cottages. Hon. Members opposite cannot talk about social justice if, on the one hand, they do not believe in it, and if, on the other, they resent the party which does believe in social justice.

Miss J. M. Quennell: I am sure that the hon. Member for The Hartlepools (Mr. Leadbitter) will forgive me if I do not follow the line he adopted in his remarks, because this is a short Finance Bill and I wish to intervene only briefly, particularly since I have a bad cold and not much voice.
I do not wish to recapitulate the arguments adduced by my hon. and gallant Friend the Member for Harrow, East (Commander Courtney). Unfortunately, his Amendment was not called. Nevertheless, I feel that this sort of question


of family support is paramount and should receive the support of hon. Members on every possible occasion.
It was suggested by one of my hon. Friends that the Budget tended to represent an imposition on production and producers. I hope that it will not have such an unexpected effect. Another of my hon. Friends referred to the age structure of our population. If one considers the returns of the Registrar-General, one sees that the age structure presents a curious picture. Half the population is, oddly enough, under 30. But that does not mean that half the population is of working age. On the contrary, the large majority of under 30's is in schools.
The figures reveal that about a quarter of the population is becoming, shall we say, rather mature. We see that a narrow section in the middle represents the working, producing and wage-earning bulk of the population who must support the rest of us. That middle section of the population must support the children, old people and infirm and it is obvious that the country is more dependent on that section of the community than on any other. The smallest proportion of the population carries the greatest responsibility.
It is unfortunate, therefore, that the impact of the Budget will tend to fall most harshly on those who are already carrying the greatest burden, not only domestic in the sense that they are becoming house owners, but also in the sense of family burdens, sending their children to school, and so on. They also have a burden in that they have older members of their families—the grandparents' side of the family—who are of some concern to them. It is those people who pay not only extra Income Tax, but in other directions—in travel, stamp insurance and all sorts of ways—who are having to carry a greater burden.
I do not wish to intervene at length, because we shall be drawing the Chancellor's attention to these matters more vigorously later, but I trust that when he replies to this debate he will bear these points in mind.

5.0 p.m.

Sir Douglas Glover: I want to intervene on Clause 1 for only a few moments. I would say to the hon.

Member for The Hartlepools (Mr. Leadbitter), who has left his place, that it is not only the Conservative Party which is criticising the right hon. Gentleman's Budget. I think that if the Chancellor had a second opportunity he would produce a very different Budget from the one that we are debating today.

The Temporary Chairman (Sir Herbert Butcher): We are dealing now with Clause 1.

Sir D. Glover: I was referring to Clause 1. In fact, nearly every foreign commentator thinks that the increase in the direct rate of taxation is not only inflationary, but also a disincentive, and, therefore, does not deal with the probems that we are facing. I was saying that, having had the reaction from overseas, I think that the right hon. Gentleman, had he the opportunity, would have brought in different proposals from the one in particular that we are discussing. So much so that I think one could legitimately plead with the Prime Minister to stop at 40 days because, frankly, I do not think that the country could stand 100 days.
To raise Income Tax to 8s. 3d. in the £ is a disincentive to the very elements in the nation on whom we have to rely to overcome the problems, which the Chancellor and the First Secretary are trying to tackle, of increasing our exports, increasing our productivity and increasing our drive for modernisation. The people who are hit by this impost are the very ones who will have to try to handle those problems. It is also a straightforward increase with no exemptions. I shall not pursue that at any great length, but it seems to me that under this Clause, if it provided exemption for those people concerned with the export drive, it might provide a very big incentive for those who are doing a very difficult job and give them additional incentive to tackle it in the national interest.
It is a sad day that for the first time in 30 years we are now debating an increase in the direct rate of taxation. I cannot believe that this will increase confidence abroad of our business ability to overcome these problems. I cannot believe that the forward-looking element in the nation will be encouraged by the Chancellor's action and I hope that when the time comes we on this side of the Committee will divide against it.

Mr. Eric S. Heffer: I want to make some comments on the points raised by the hon. Member for Ormskirk (Sir D. Glover). He said that this was a sad day for the country that we have been forced to introduce direct taxation of this kind. The fact is that in the past we had increases in indirect taxation, which is the most unfair method of taxation of any kind because it means that at all times the lowest-paid worker is the worst hit. If we increase taxation on any goods, it means, in an indirect way, that if one's income is £10 a week one is paying precisely the same amount in taxation as someone who has an income of £20 a week. The method of taxation which has been adopted by the Chancellor is much the fairer and is obviously the way in which we should deal with this question.
I should also like to take up points raised by some hon. Members concerning the holding back of the social services. The question of pension increases has been mentioned this afternoon. I do not know whether hon. Members opposite live in precisely the same world that I live in. I do not know whether they meet the same old-age pensioners whom I meet. I do not know whether they have ever mixed with the lower-income groups in the way that I have mixed with them and worked with them. I do not think that they can possibly live in this sort of world, because if they did they would know that the people voted for the Labour Party precisely because they intended to do something for the old-age pensioners. I say that this is absolutely justified.

Mr. Ian MacArthur: I would point out to the hon. Member that many people voted for his party at the last election simply because his party promised that there would be no general increase in taxation, and that an increase is precisely what has taken place.

Mr. Heffer: I cannot remember, at any stage in our propaganda, when we said that there would be no increase in taxation. If hon. Members opposite can give chapter and verse where this has been said, I will accept it. It was certainly not part of my election programme and not part of any of the speeches that

were made by people who had any influence or authority with the Labour Party in the last campaign. Can hon. Members opposite give chapter and verse on this point?

Miss Quennell: If the hon. Gentleman likes to get the scripts of the political broadcasts at the General Election he will find the statement that there would be no general increase of taxation. When he began his speech he said that hon. Members on this side had forgotten the increase in indirect taxation in the last few years. Would he be so kind as to specify what he had in mind?

Mr. Heffer: I did not say in the last few years. I said that in the past hon. Members opposite had put forward increases in taxation by indirect methods.

The Temporary Chairman: We are dealing with Clause 1.

Lieut.-Commander S. L. C. Maydon: Could the hon. Gentleman tell us what has happened to Purchase Tax during the last few years? That would enlighten us about this matter of indirect taxation.

Mr. Heffer: Although I am a new Member, I am quite used to being interrupted when making political speeches, but I have never had to answer two interruptions at the same time. Let me, first, deal with the interruption by the hon. Member for Petersfield (Miss Quennell) and then I will try to get round to the point raised by the hon. and gallant Member for Wells (Lieut.-Commander Maydon).

The Temporary Chairman: I hope that the hon. Member will address himself to the Question "That the Clause stand part of the Bill". He will help the Committee by doing so.

Mr. Heffer: I shall be delighted to do so, Sir Herbert.
Reference was made to a transcript of an interview given by the Prime Minister. That same point was raised the other day on the Opposition Front Bench, and the Prime Minister replied to the point. Indeed, he took the matter a little further than the point which was raised. Do not let us keep raking up something that we have already discussed and which has been amply explained by the Prime Minister.
Let me make my point again. Some of the extra money obtained should go to assist the old-age pensioners. They have suffered for a long time as a result of the policies pursued by the Conservative Government. [An HON. MEMBER: "Nonsense."] Hon. Members may call it nonsense, but I can give examples of people living in my road—and I do not live in a street full of affluent people, but ordinary honest-to-goodness working-class people—who are living on the old-age pension and are hiding their poverty behind their clean curtains. In fact, they are living on a level which should make us feel ashamed.
I accept one point which has been made from the benches opposite, that the middle income groups are to some extent affected by increased taxation, and that if it continued without an increase in productivity it could lead to a certain difficulty among that section of the population. Any intelligent person would know that those who are in that group are the very people—particularly in this technological age—who have to be given the incentive to assist increasing our productivity and get us out of a hole. But we must view the situation in relation to the overall position of the country. Are we to be satisfied with the same level of production that we have had in the past? Are we not to have an increase in productivity? Some hon. Members opposite have suggested that we ought to have done something else. I have a solution for that one. Perhaps we should have increased taxation a little more quickly, and to a greater extent, for the higher income groups. Hon. Members opposite would not be too happy about that solution.
5.15 p.m.
However, I accept the point about the middle income groups, and I hope that over a period of time steps will be taken to ensure that this section of the community is given added incentives to enable it to assist in our efforts towards higher productivity. That may seem as if I am arguing against my party's point of view, but I am not. It is a recognition of the fact that this section of the community has got to be assisted to overcome our production problems. I hope that this matter will be taken into consideration, but that does not mean that the Government have in any way acted unwisely through their measures.
We have had to take the steps we have taken purely because of the situation in which we found ourselves as a result of the policies pursued by the party opposite.

The Temporary Chairman: I would be obliged if the hon. Member would confine himself to the Question, "That the Clause stand part of the Bill".

Mr. Heffer: I am happy to conclude on that note, Sir Herbert.

Mr. A. E. Cooper: The problem in a debate of this sort is to know just how wide one can go. The Clause, as I understand it, deals with Income Tax, but it seems to me that we can discuss the economic situation of the country, old-age pensions, the difficulties in Walton and all places north of Crewe.
I want to deal with the Question. "That the Clause stand part of the Bill" and I hope the Chair will not object to that. By common consent, Sir Herbert, this is a thoroughly bad Clause in a thoroughly bad Bill. The Clause is bad, irrelevant and harmful to the economy. It is obviously conceived in haste by panic out of incompetence. I do not believe the Chancellor of the Exchequer has any experience whatsoever of industry. I believe that his past experience since before the time he took up politics was in the Treasury, but in the actual operation of industry he is, like so many of his colleagues, completely without experience. I wonder whether he has the slightest idea how industry operates, how the men who work in industry tick, and what makes the machine go.
I want to tell the right hon. Gentleman and the hon. Member for Liverpool, Walton (Mr. Heffer) that it is possible to have all these wonderful aspirations about developing the social services and providing everything one wants, but not one of these things is possible unless industry prospers. That is the basis of everything. That is the rock upon which we build our prosperity and it is also the rock upon which we founder if the country does not prosper.
The right hon. Gentleman has got his priorities all wrong. I will concede at once that there is an honest field for argument between different sections of economists, some of whom will argue


that we should have higher direct taxation and lower indirect taxation, while others will argue the opposite. I support the school which says that direct taxation should be at the lowest possible level and that indirect taxation should make up the difference. I believe that men, no matter in what strata of society they have their being, find their incentive in the amount of money they take home at the end of the week or month. In other words, we should reduce taxation on our earnings and be content to have higher taxation on our spending.

Mr. Barnett: Does the hon. Gentleman include rates in indirect taxation that he would like to see increased?

Mr. Cooper: Yes, I would regard that as indirect taxation, but it is not part of this Clause. We can deal with that on another occasion, when right hon. Gentlemen opposite may fulfil one of their election promises and bring forward some measures to relieve the ratepayer.
So far, the record of the present Government is such that not one of their promises have been fulfilled. In fact, they spend their time breaking so much china in Europe that one can only imagine that the Chancellor of the Exchequer is one of those people who is like a bull and who carries his own china shop around with him.
The Chancellor is quoted as saying, during the election campaign, "We will not sign cheques until the money is in the till." It seems to me that that is another statement made by right hon. Gentlemen opposite which really does not bear analysis after the first 50 days of Harold, probably the most disastrous 50 days ever known in the history of this country. I want the right hon. Gentleman to know just what he has done. We will pinpoint this for him so that he can go to his constituents and tell these people just what he has done.
Let us consider the young and rising scientists, the men who, in this modernistic age, this technological Government want to take our country forward, the men we want to encourage. At present, they are probably earning £2,000 to £3,000 a year. At least £1,000 of that salary is taxed at the standard rate. We want to encourage them so much that we knock £50 off their salary

to start with, and if we give them a rise we tax that also.
In the last Parliament the right hon. Gentleman and the Prime Minister were grumbling at the then Conservative Government because of what they were pleased to call the brain drain, the scientists who were leaving the country and going to America because they could not get sufficient rewards here. What are the Government doing? They are encouraging them by slapping another 6d. on Income Tax. That encourages them mightily! In Clause 2 we shall deal with how the Government have encouraged these young scientists and business executives upon whom the whole future of the country depends.
These young men have to be taught. They have to go either to technological colleges or to universities and be trained by professors and men of that quality. We all know that teachers, from professors downwards, are underpaid. We have tried very hard in the last few years to lift up their salaries, and much has been done to help them. In April next year the teachers are due for another increase. So what has the Chancellor done? He has not only slapped an additional 6d. in the £ on their existing pay, which is to cost them anything from £50 to £80, but if their new increases are round about £100 or £150, which is what is expected, that money also is to be taxed at the higher rate.
Is this really the way to encourage the right people to enter the teaching profession, the way in which we are going to build up a first-class industrial organisation in this country? No. The Chancellor has tried to curry favour with what he has been pleased to call his Labour supporters. That is all he has tried to do.

Mr. Callaghan: On the question of facts, the hon. Gentleman said in a previous debate that for those earning £2,500 a year the increase of 6d. in the standard rate would mean an extra £100 in Income Tax being taken out of their pay packets. It happens to be £20, about one-fifth of the figure that he mentioned.

Mr. Cooper: I do not think that the right hon. Gentleman can really sustain that for one moment. A person starts to pay the full standard rate of Income Tax round about £800 to £900 a year. Therefore, if a man is receiving a salary of


around £1,600 a year and if we take the difference and multiply it by 6d. in the £, that alone give a figure of around £80. [HON. MEMBERS: "No."] I am talking about the facts; I am not talking about the theoretical nonsense which the right hon. Gentleman gets from his two Hungarian advisers.
The plain facts are that this increase in the standard rate of Income Tax is bad and harmful for and irrelevant to our economy, will do nothing whatever to help us in our present difficulties, and will be an everlasting shame to the Chancellor who, I would hope, would try to learn something about British industry.

Mr. William Baxter: The hon. Gentleman believes that there should be some system of taxation, that taxation is absolutely necessary in order to run the country, but he suggests that it should not be the people in the £1,000 a year bracket and upwards who should bear the heavy burden of taxation.

Mr. Cooper: It is a great pity that hon. Gentlemen opposite do not bother to listen to one's speeches. Of course there must be taxation. I said that there was an honest argument as to how that should be distributed between direct and indirect taxation. I happen to be one of those people who believe that there should be a limit to the amount paid in direct taxation and that the balance should be obtained from indirect taxation. If the hon. Gentleman opposite thinks differently, he is entitled to his point of view.

Mr. Geoffrey Lloyd: My right hon. Friend the Member for Berwick and East Lothian (Sir W. Anstruther-Gray) began the discussion on this Clause by drawing the attention of the Committee to the effect of the rise in the standard rate upon the earnings of young scientists and technologists, and my hon. Friend the Member for Ilford, South (Mr. Cooper) addressed himself to the same point.
I wish to support my hon. Friends on this point, because I was rather surprised that the hon. Member for Middlesbrough, West (Dr. Bray) brushed this argument aside so contemptuously. He said that he was in touch with the people concerned and that this increase in the standard rate would not have any serious effect

on them. I do not think that the hon. Gentleman was right in this, and I do not think that he is right in representing that he speaks for the young scientists and technologists in the matter.
I would attach more credence to the letter which my right hon. Friend read out—which, I believe, was a private letter sent to him—concerning an actual case of a young scientist seriously considering the balance of self-advantage and whether he should remain in this country or should go to the United States, and who was influenced by the amount of income left to him after tax and was beginning to wonder whether he ought to consider seriously going to the United States.
This is not the only example that we have had of young scientists taking this point of view. I remember quite vividly a letter which appeared in The Guardian as recently as 14th November. The writer did not give his name, but signed himself, "A young Ph.D." I think that he was one of those young scientists who, unfortunately, listened to the siren call of the Prime Minister during the election campaign when the right hon. Gentlemen was addressing himself so seriously at the time to that task. The letter was a rather bitter letter, saying that one of the first actions of the party opposite on being returned to power was to increase the standard rate and, as the writer put it, to lower his effective salary.
I think that the party opposite would be unrealistic if it began to convince itself that increased taxation of this kind and the lowering of the effective salaries of such men do not have a certain effect on them when they are looking to their future and considering whether it should be in this country or, for instance, in the United States. I can remember, some years ago, when the standard rate was higher than it was under the last Government—it was soon after I ceased to be the Minister of Fuel and Power and, therefore, must have been in 1956—when I was visiting the establishments of the Atomic Energy Authority in the North of England and was seeing quite a lot of the young scientists in an informal way.
I was rather shocked to learn the attitude of some of them concerning whether they should stay in this country or go to the United States. They approached the problem—and I realised


afterwards that it was perhaps not unnatural for them to do so—in a scientific and realistic way. One of them put it to me that he had calculated what would be his net income over the period of his active scientific life. He had set out to see what was the optimum career, as he described it—a rather scientific almost statistical term—which he could have in this country or in the United States.
I am sorry to say that he had come to the conclusion, partly because of the level of taxation here and over there, that his optimum career would be in the United States. This came as a bit of a shock to me. We cannot expect our young scientists to decide on the nature of their careers purely on the grounds of patriotism and natural feelings as we would want them to do. We are not entitled to ask them and their families to take that view, although as a matter of national policy we should do everything we can to encourage them.

5.30 p.m.

Mr. George Y. Mackie: Is it not a fact that the main advantage to the young scientist going to the United States is the amount of money he will get, not the rate of tax?

Mr. Lloyd: The hon. Member makes a substantial point. It is the point which was made by the hon. Member for Middlesbrough, West and I would not disagree at all. We hope that our economy can march forward faster and that as we proceed to more modern methods of production it might be that the amount which has to be taxed will be greater and the difference in the two countries will be less. It still remains the fact that it is the net amount of effective salary, as the young Ph.D. called it in his letter to The Guardian, which is most important to them and the rate of taxation has the most immediate effect on that.
Although I understand that the Chancellor is attracted by those technical considerations in the Treasury which lead toward standard rate, I think that even he would agree that there are substantial disadvantages in the effect on young scientists and technologists

which my hon. and right hon. Friends have represented in this debate and they have a very unfortunate effect in view of the action which the right hon. Gentleman has taken.

Mr. Barnett: I had not intended to speak on this subject again, having spoken on Second Reading in general terms on it, but I am compelled to come into this discussion because of some remarks made by hon. Members opposite, particularly the hon. Member for Ilford, South (Mr. Cooper).
When one considers increases in the incidence of Income Tax and the extra 6d. involved, it is entirely wrong to say that a teacher will be affected to the tune of £100. I gave an example on Second Reading, using figures with which hon. Members will be aware—£3,250, less £1,250 expenses, for a man with a wife, two children, and generally with a mortgage. The extra amount there would be about 3s. 6d. a week. Many school teachers, if not the majority, would have a wife and children and a mortgage. The hon. Member also referred to amounts of £800 or £900. There the increase would not be anything like as much as the figure he suggests.

Mr. Cooper: If the hon. Member will be good enough to read what I said on Second Reading and in this debate, he will see that when I spoke about £3,000 and £3,500 I referred to a husband and wife who were teachers, which is not uncommon in this country. I was talking about their combined tax.

Mr. Barnett: If the hon. Member was talking about their combined tax he must be aware that they both would be entitled to reduced rate of tax, £200 at 4s. and £200 at 6s., and the amount involved would be nothing like the £100 to which he refers. He should get his facts right.

Sir Knox Cunningham: Could the hon. Member help us by giving the figures for such a family where there are five children?

Mr. Barnett: I was quoting the case of a family with two children, because it is an average family. The hon. and learned Member may not be particularly interested in an average family, but the country generally is. What has appalled me more than anything else is that one hon. Member opposite after another has


dealt with this problem in exactly the same way as did the right hon. Member for Barnet (Mr. Maudling). On Second Reading, I asked hon. Members opposite whether, if they did not want to see an increase in taxation—and none of us wants that—they had not voted for, or, rather, not voted against, increases in pensions. They vote against every possible method of paying for those increased pensions. Hon. Members on this side of the Committee and people in the country must be forgiven for believing that this is a somewhat cynical approach.

Mr. Hirst: Not at all.

Mr. Barnett: The hon. Member may not think it a cynical approach, but to suggest that we should have increases in pensions but have no method of paying for them is, I suggest, a cynical approach

Mr. Stephen Hastings: The cynical approach is adopted by hon. Members opposite who went to the country and said that they would make all these increases without increasing taxation, and who are now exacting increases in taxation.

Mr. Barnett: The hon. Member should be aware of his facts. Let us be quite clear. Hon. Members opposite went to the country saying nothing at all about the deficit on balance of payments. [HON. MEMBERS: "Oh."] Oh, yes.

The Temporary Chairman: I hope the hon. Member will not get too far from the Question, "That the Clause stand part of the Bill".

Mr. Barnett: I am prepared to stick to the Question, but when I am asked a question I feel it necessary to reply to it.
The reason which impelled me to come into this discussion is that one hon. Member opposite after another said that we should not have this increase in tax. I said in my previous contribution that I was not happy about the increase, but if we are to increase pensions now, and not at some distant date, we have to adopt a responsible approach. This, I believe, my right hon. Friend has done in his Budget.

Dame Irene Ward: In view of the fact that the Conservative Government increased pensions five times, could the hon. Member say how

often we put up Income Tax to meet those increases? We did not put it up at all.

Mr. Barnett: I could perhaps answer the question better by referring to the fact that one increases taxation generally—by way, for example, of an increase in rates, or tax on ice-cream or Purchase Tax.

Dame Irene Ward: Answer.

Mr. Barnett: The hon. Member has the answer. What really matters to the people is that those who are worst affected—

Dame Irene Ward: Answer the question.

Mr. Barnett: I am answering the question. If the hon. Lady will be patient I will give her a full answer. Of course, there was not an increase in the standard rate of Income Tax under the last Government, but there were increases in indirect taxation which fell most harshly on people who were worse off. When I intervened to ask an hon. Member opposite whether, for an alternative suggestion by way of increasing taxation he included an increase in rates, he said that that was another question. It certainly is.

Colonel Sir Harwood Harrison: Before coming to the main points I wish to raise, I should like to answer the hon. Member for Heywood and Royton (Mr. Barnett). Although probably he did not mean to do so, he gave a rather false impression to the Committee by suggesting that the Conservative Government raised taxation, particularly indirect taxation. The answer is that over the 13 years of Conservative government the percentage of taxation on income came down a large number of times.
I am intervening because a great deal has been said about that category of our citizens who take high degrees, such as that of Ph.D. I had the opportunity in the summer of having staying with me the first graduate of our new University of East Anglia. He is taking his Ph.D. in that university. He is taking it in biology. I did not get involved with him on that subject, but we both have a common love of saving and this question came up in our discussions. He pointed out that in their student days the grant which students receive tax-free is not sufficient. I have tabled a


Question to the Minister of Education on this subject. My friend went into the question why some friends of his age group and others go for a time. maybe for all time, to the United States, and the fact that it is taxation and nothing else which makes them do so.
Before we finish with this Clause we ought to be wise in understanding that this increase of 6d. in the standard rate of Income Tax has an effect on the future of individuals. The Chancellor will deal in his next Budget statement with the whole question of company finance and corporation tax. Here, for the first time, we are dealing with a rise in Income Tax—a sad thing after 13 years in which we have had reductions—and its bearing on personal incomes.
I do not know whether I shall draw the Chancellor. We have had to go through the Clause to see what the standard rate will be after April next year. Does this mean that we shall not be debating the question in six months' time of a further 6d., 9d., or 1s. increase in Income Tax? Will the Chancellor give that assurance?
In the Committee there has been much play about whether or not the Labour Party had said that it would raise Income Tax. I ask another question. What did the Liberal Party say about raising Income Tax? Did it make great play of the fact that when it got back to Parliament on the votes of commuters who will pay the increase of 6d. one of the first votes it would give would be in favour of raising the standard rate of Income Tax? When we receive the Budget Resolutions there is very little time—[Interruption.] Hon. Members opposite have to go into a Lobby because their Whips are on. I know that, having been on that side of the Committee.

Mr. Eric Lubbock: We knew even less about the mess left by the Tory Party than did hon. Members opposite.

Sir H. Harrison: It is not a question of mess, but did you or did you not—the Liberal Party—say that this would be one of your first votes?

The Temporary Chairman: Order. Perhaps the hon. Baronet will direct his remarks to the Chair.

Sir H. Harrison: I am sorry, Sir Herbert. I think it right that the electors should know that the Liberal Party supports the raising of the standard rate. I hope that this Committee will not support the Clause.

5.45 p.m.

Mr. Richard Crawshaw: I had not intnded to speak in the debate. I came hoping to hear the answer that every Chancellor of the Exchequer has hoped to hear: how to raise more money without increasing taxation. It is amazing that the party opposite, which will not vote against the increases in pensions, should say that the Government ought not to put up taxes to pay for them. Certainly, right hon. and hon. Members opposite have not mentioned any specific taxes which should be put up in place of this increase.
We are told that indirect taxation is the answer. We can argue about this all day, because our philosophies are completely opposed on that point. We do not believe that it is quite the same for a person earning £2,000 to £3,000 a year to pay 5d. extra on a packet of cigarettes as it is for a working man. The two sides are arguing at cross purposes, because we on this side can never see the point of the argument put by Members opposite. [HON. MEMBERS: "And 6d. on petrol?"] I assume that, in most cases, a person running a car can afford an extra 6d. That, however, is not always the case with a person in the lowest income group when it comes to being able to afford an extra 5d. on cigarettes.
We have been told about people threatening to leave the country because of this increase in Income Tax. The party opposite fought the election on the issue of, "Don't let the Socialists take it away from you", and got its answer. The answer came from very many people who decided that, since they had never had it, it could not be taken away from them.
Hon. Members opposite do less than justice to the ordinary workers when they talk about objections to an extra 6d. Everyone objects to taxes, but the main argument comes on the purpose. If the money is to go to Ferranti, or firms like


that, then the ordinary people do not like their money taken from them for such a purpose. If one puts clearly the issue of paying extra taxation in order to give pensioners an increase, then we know the answer, for we fought the election on that issue.
We found skeletons in the cupboard when we took office. Where is the £700 million in our balance of payments deficit to come from? The Liberal Party says that it knew even less about that deficit than we did. We knew nothing about it.

Mr. Hirst: Even less now.

Mr. Crawshaw: And we shall probably go on discovering these things through to the next generation. The people do not object to this extra 6d. on the Income Tax if it goes to the right persons. The right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) estimated that it would mean an extra £80 on an income of £1,600. The Leader of the Opposition, using matches, managed to do better than that. I myself estimate it at £40.
The fact is that the two parties are completely opposed on this issue. Hon. Members opposite favour indirect taxation so that the poorest people pay the same amount of tax as those earning more. We do not accept that and never shall.

Dame Irene Ward: I want to get the record straight, because we are in such a muddle about what hon. Members opposite are talking about. I would like the Government's view to be stated clearly by the Chancellor of the Exchequer. As far as I know, no one has ever said that this increase in the standard rate of Income Tax is to be used for the increases in the retirement pensions.
It is true that, if we were told that these pensioners were to have the benefit of the increase in Income Tax, both sides would be prepared to pay it. [HON. MEMBERS: "Oh."] Most certainly. My complaint is that, although the Conservative Government raised retirement pensions five times, provision for the increases was made at the time and never involved an increase in the standard rate. That is the point at issue.
The hon. Member for Liverpool, Toxteth (Mr. Crawshaw) said the Con-

servative Government paid for increased pensions by putting up indirect taxation. We did not increase indirect taxation to meet our obligations when we raised retirement pensions. I have a very long memory and I recall that, in the last Budget of the post-war Labour Government, in 1951, we were told that the Government could not meet an obligation to increase pensions for anyone who was entitled to a pension after October, 1951. They could not find the money for that. At the same time, however, the then Government increased the standard rate of Income Tax, Purchase Tax and fuel tax. Then, when they found how unpopular they were, they decided to go to the country, when they lost the election. That Budget was the result of six years of Socialist rule. I am sick of hearing about 13 years of Conservative rule.

The Temporary Chairman: Order. Will the hon. Lady now discuss the Question, "That the Clause stand part of the Bill"?

Dame Irene Ward: Certainly, Sir Herbert.
Hon. Members opposite talk about direct and indirect taxation and how no one will object to paying an increase if the benefit goes to retirement pensioners. We know now just where we are. But we did this without increasing either direct or indirect taxation. I hope that the Chancellor will explain exactly what the increase in direct taxation is supposed to mean. It is no good talking about balance of payments difficulties. That has nothing to do with the pensions increases. It is an entirely different situation.
The Chancellor has a clear brain, although sometimes he operates it in a rather immature fashion. I would like to hear whether he is to use the additional 6d. on the Income Tax to pay for the pension increases. If he is doing so, I am sorry that he has not included many other people who are without pensions, since a lot of us might have been prepared to accept that with appreciation.
Before you occupied the Chair, Sir Herbert, my hon. and gallant Friend the Member for Harrow, East (Commander Courtney) asked whether the increased


taxation could not be used to help spinsters and bachelors looking after elderly parents. I do not think that my hon. and gallant Friend has had the good fortune to know about an organisation called the Single Dependants' Association.

The Temporary Chairman: Order. The Question is, "That the Clause stand part of the Bill".

Dame Irene Ward: I know that, Sir Herbert. That is why I was trying to say, before, that my hon. and gallant Friend was allowed to make his point. With very great respect, I find it difficult sometimes, when there has been a change of occupancy of the Chair after I have been waiting the whole afternoon, to find that I am ruled out of order when following what another hon. Member has said.

The Temporary Chairman: Order. I am sorry to disappoint the hon. Lady, but Clause 1 deals with charges of Income Tax for 1965–66 and I would be grateful if she would address her remarks to that.

Dame Irene Ward: But this point is related to taxation. You will see that it is if you allow me to develop my case for a moment, Sir Herbert. It is a matter which has interested Conservative women Members for a long time—not necessarily the men Members—and perhaps I may be allowed to relate this point to taxation, which I am going to do.
My hon. and gallant Friend the Member for Harrow, East said he would not have the same objection to the raising of the standard rate if it were to be used to help people providing for their elderly parents. That was a taxation proposal. We get a certain amount of dependants' allowances, so I suggest that this does come within the framework of Clause 1, when considering how we are to raise the money.
Perhaps the Chancellor will say that he has received a document from the Rev. Mary Webster. This lady and some of my hon. Friends and I saw my right hon. Friend the Member for Barnet (Mr. Maudling), when he was Chancellor, and discussed the problem. The present Minister of Defence for the Royal Navy

was concerned as well, together with his then colleague from Woolwich, West, Mr. Colin Turner. I want to know now if the Chancellor will answer me on this specific point.

The Temporary Chairman: Order. I am sorry, but the hon. Lady must keep herself within the rules of order.

Dame Irene Ward: Well, I look forward to hearing the Chancellor, because I know that Front Bench spokesmen are allowed to say what they like when back benchers are very often ruled out of order. I hope that the right hon. Gentleman will tell us whether he will follow the documents that the Rev. Mary Webster will no doubt have sent to him.

The Temporary Chairman: Order. I have told the hon. Lady that I cannot permit that. She will please confine herself to the Question before the Committee.

Mr. Hirst: On a point of order, Sir Herbert. I am not very clear on this matter. We are discussing the standard rate of Income Tax. In that context is it not in order to argue that it should be reduced by 6d. or used for some purposes? I accept what you say, but it would be helpful if we knew your thinking on this. It is difficult to follow.

The Temporary Chairman: If the hon. Gentleman will carefully read Clause 1 he will realise what remarks can be made which are in order and will have no difficulty in keeping within the rules of order.

Dame Irene Ward: That is very nice of you, Sir Herbert. I shall bring my remarks to a close. But, in reply to what you have said, I will ask you to read in HANSARD tomorrow the report of what was said when the debate opened. Then perhaps you will not feel quite so badly about my introducing this proposal.
I hope that the Chancellor will tell us what the increase in Income Tax will cover, because hon. Members opposite have talked in such a muddled way. I am surprised that he has not already intervened, because he really must be embarrassed to hear the commitments the Government expect this increase to meet. I look forward to hearing exactly what it is intended to cover.
6.0 p.m.
I fully agree that the bigger one's income the more one should pay to the Exchequer for purposes laid down by Parliament, but I have not yet heard what is to be done with this 6d. which is being extracted. I am a supporter of those on small fixed incomes. If the 6d. is to be used for their benefit, I shall approve, but, if it is to be used for a purpose of which I do not approve, then I shall take the view that my party is absolutely justified in welcoming the increase in retirement pensions while, at the same time, saying that the right hon. Gentleman has not done as well as the Tory Government did in finding the finance to help those who are to get these increases.
I do not think that 12s. 6d. a week will make all that difference between the standard of living of pensioners when the Tories were in power and under the new type of life which right hon. Gentlemen opposite seem to believe to be about to descend on retirement pensioners. Perhaps hon. Members opposite should have accepted the Liberal programme on this issue.
Let us have a clear and precise statement about what is to be done with the 6d. increase for certain people, but let me make it clear that I have no objection if it is to be used for old-age pensioners.

Mr. Malcolm MacMillan: I hope that my right hon. Friend and the new Labour Government will be more effective in making pensions higher and in keeping pensions at their value than were hon. Members opposite, who have been boasting about the number of times pensions were increased under the Tories. They have forgotten that the locusts of the cost of living were having a five-course meal on the pensions as they were being increased five times. It would not be so necessary now to have this imposition if the cost of living had not been going up and up all the time during those 13 years, and it would not be so urgent today, under great pressure, for humanitarian considerations apart from anything else, to have to find new means of paying for increased pensions.
Today, I have seen an extraordinary exhibition which has contrasted what we saw a month ago in the first sitting

of the new Parliament with the tide of argument which has now come up when sharp practice charges have seemed to ooze from hon. Members opposite when they have mentioned old-age pensions. I propose to deal with what they have said. One after another they have proposed that we should do almost anything but use the Clause—

The Temporary Chairman: Order. I should be glad if the hon. Member would make not the speech he is making, but a speech on the Question before the House.

Mr. MacMillan: I heard speeches from hon. Members opposite which I should like to answer and which, in the view of the Chair, were relevant and I shall continue to discuss them in so far as the previous occupant of the Chair allowed those speeches to be made. [HON. MEMBERS: "Oh."] I am certainly not criticising any Ruling of the Chair.
The hon. Member for Cardiff, South (Mr. Box) suggested quite solemnly that instead of raising Income Tax and finding this money in an honest straightforward way, with direct taxation, the Government should apply the regulators, in other words, that as they increase old-age pensions they should eat them away with increased Purchase Tax.

Mr. Box: Mr. Box indicated dissent.

Mr. MacMillan: That is obviously what the hon. Gentleman had in mind. At least, that is the logic of what he is saying. [Interruption.] I am open to contradiction, but I prefer argument to interruption. The hon. Member said that the Government should apply the regulators and get the money that way instead of by this method of direct taxation. He does not deny that.

Mr. Box: Nonsense.

Mr. MacMillan: The hon. Gentleman now describes his speech as nonsense.

Mr. Box: I suggested that as part of the increase in Income Tax was to be used for the increases in pensions that would be inflationary. I suggested that if the Chancellor of the Exchequer required to raise this additional revenue, not only for pensions, but mainly for other purposes, it would have been wiser to use the regulators for the purpose.

Mr. MacMillan: It surely flows from the hon. Gentleman's argument that the use of the Purchase Tax part of the regulator system would raise the cost of living for old-age pensioners in particular and so reduce the value of any increase in pensions. One hon. Gentleman said that sons and daughters rather than the nation should look after "Dad and Mum". I am sure that he is now furious with himself for having said it.

Commander Courtney: As a measure of social justice has so often been preached by the Labour Party, hon. Members opposite might think of that very worthy class of the population which supports its old folk and does something for them which can thereby be taken off National Assistance and so perhaps be a credit to the Exchequer.

Mr. MacMillan: That point has been made every so often in these debates and, along with similar arguments advanced by hon. Members opposite, is hardly worth considering as a general argument on policy. Quite apart from what may be done by such people, we are opposed to relating pensions to free bags of coal and what members of the family can allow in supplementation of what the State itself provides.

Commander Courtney: Does not the hon. Gentleman think that there is any virtue in strengthening family ties by encouraging people to support the old?

Mr. MacMillan: I will not go far in that direction except to say that some families are more fortunate than others in their views on this as on other subjects. There would never be a basis of uniformity in the treatment of old people, for that treatment would vary from family to family and would be left to the charity or lack of charity of the other members of the family. The hon. and gallant Gentleman is living in the nineteenth century. Of course we want to strengthen family ties, but not at the expense of the dignity of old-age pensioners.
The hon. Member for Barry (Mr. Gower) wholly opposed the Clause, because he was against this method of paying. He said a great deal about the Clause in relation to the increases for old-age pensioners, but he did not hint at any other way of which he approved. The basis on which he would justify an

increase in old-age pensions was that of a steady increase in the rate of production from year to year, but that was exactly the situation which the Labour Party found not to exist when it came to power.
The hon. Gentleman was, therefore, basing his argument for an increase in old-age pensions in the near future on conditions which did not exist. These conditions were a continuing rate of increase in production year by year over a period of years. I know the story of the few months before the election, but the period just before the election was even more significant.

Mr. F. A. Burden: The hon. Gentleman said that the Government did not find a continuing rate of expansion when they came in. We know that they were to do a tremendous amount in 100 days, but they could not have expected that the increase which they said they would bring about could be attained within 35 days.

Mr. MacMillan: It should not have been left to the succeeding Government to do in 50 days what the Tory Party failed to do in 13 years. While it is very flattering, that is surely asking a little too much of hon. Members on this side of the Committee.
What is extraordinary about the attitude of hon. Members opposite is that not one of them appears to oppose the use of money levied by direct taxation for the purpose of increasing social benefits. Not one of them comes out flatly and says so. Yet they do not say by what method they would propose to do what the money raised by this method of direct taxation is about to do. Can they tell us what they would do if they believe in increasing the social benefits?
It is important that hon. Members opposite should not only criticise, because in every criticism there is an implied alternative, and we have not yet had any hint of an alternative method from hon. Members opposite, although they still pay lip-service to social justice and to the importance and even the urgency of increasing pensions. Not one hon. Member opposite has courageously said, "We do not believe in that. We would not have done it". Unless hon. Members opposite have an alternative method


which they can justify of financing the increases, we must use the method proposed by the Government.

Dame Irene Ward: The hon. Gentleman has not listened to the point that I made. On the five occasions that we increased the retirement pension, we did it within the framework of the Finance Bill.

Mr. MacMillan: I do not think that I am giving anything away when I say that the hon. Lady and I have been in the House for a long time. I always listen to her with pleasure, and very often with great profit. When hon. Members opposite raised pensions, we supported them every time. There was no Division on them. But there has never been since 1951 anything like the proposed scope and extent of the increases which are now proposed and which have to be financed.

Dame Irene Ward: Half a crown.

Mr. MacMillan: The hon. Lady is not quite right.

Dame Irene Ward: Yes, I am. The last increase in pensions which we made was 10s. The Government are putting them up by 12s. 6d. So all this argument is about half a crown.

Mr. MacMillan: The hon. Lady must remember that it was the Labour Party which set the post-war fashion in social advance and increased pensions. Any criticism—

The Temporary Chairman: I do not want to interrupt the hon. Gentleman, but he is going rather further than he should on the Question before the Committee.

Mr. MacMillan: I apologise, Sir Herbert. I did not want to do the hon. Lady the Member for Tynemouth (Dame Irene Ward) the discourtesy of not answering her.

Dame Irene Ward: It is very kind of the hon. Gentleman.

Mr. MacMillan: The right hon. Member for Berwick and East Lothian (Sir W. Anstruther-Gray) talked about scientists flowing from this country. He used that as an analogy. I thought that it was an irrelevant comparison to make, but to use that argument is a little bit shoddy. I am sure that no scientist, whether

young or old, whether he proposed to go to America or anywhere else, would grudge the old-age pensioner an increase, or, if there were no alternative way of dealing with the matter, would refuse to pay an extra 6d. on the standard rate of Income Tax. I am sure that no ordinary, average, decent citizen, for whom we should all be speaking, would refuse, or would want to refuse, to help the people who, above all, have earned their claim to consideration.
The hon. Lady the Member for Tynemouth spoke about the narrow block of the population which increasingly must bear the cost of taxation and social security benefits. Of course, what she said was perfectly right. But, at the same time, one does not forget, for that reason alone, the fact that the old-age pensioners have established their claim by a lifetime of service.

The Temporary Chairman: Order. The hon. Gentleman will please listen to the advice of the Chair and keep to the Question.

Mr. MacMillan: I was replying to the point which has been extensively made by the hon. Lady. I do not think that you, Sir Herbert, were in the Chair when the point was made. It related to the block in the population which has to bear the cost of taxation and social security benefits. However, I have finished what I wished to say on it, and I will depart from it.
One hon. Member opposite said that, in contrast with the promised 100 days, he had never known 50 days which were more disastrous than the 50 days of this Government. I thought of the 50 days of Suez and of everything which flowed from that.

The Temporary Chairman: Order. There is nothing in the Clause about Suez, and the hon. Gentleman must know that.

6.15 p.m.

Mr. MacMillan: Yes, Sir Herbert, but the method which hon. Members opposite used to finance the extortionate cost of £320 million of Suez was not this method. Their method was to increase indirect taxation, which put up the cost of living for old-age pensioners and people on fixed incomes. They had to increase old-age pensions time after time


in order to catch up with their own follies and with what happened during their own mad 50 days.

Lieut.-Colonel Sir Walter Bromley-Davenport: How about devaluation?

Mr. MacMillan: Devaluation helped our imports at that time. Hon. Members opposite may yet be sorry if they make a dirty word of devaluation for all time.
If hon. Members opposite agree with the Labour Party and the Liberal Party that these increases should be made over the whole field of social insurance for the first time since 1951, and if they have no alternative method of dealing with the matter, should not they support the Government in using the method of increasing direct taxation as a contribution towards financing them?

Sir Rolf Dudley Williams: I must confess that I never thought that the hon. Member for the Western Isles (Mr. Malcolm MacMillan) would finish his speech by referring to the Suez operation. I should have thought that the behaviour of the Labour Party at that time was something which it would want to forget.
I wish to address my remarks, strange to relate, to the Clause. It is clear, without doubt, that a considerable amount of the taxation which will be raised by the increase in the standard rate of tax will be disposed of in increased social benefits. I must congratulate hon. Members opposite on the way that so many of them have managed to avoid any reduction in their standard of life because of this impost. So many of them are in the Government that no doubt they will be able easily to pay this extra instalment of Income Tax. If they are more fortunate and the recommendations of the Lawrence Committee are implemented, I have no doubt that further benefits will accrue to them. However, I should have thought that it would be better if such implementation did not take place at present.
The hon. Member for the Western Isles referred to the necessity of raising the tax in order to assist the old-age pensioner. Quite rightly and perfectly fairly, and, I thought, within the scope of the Clause, he referred to the record of the two parties in this respect. I well remember his

party's record—a retirement pension of 26s. When it was first brought in reduced to 20s. by inflation by the time that the Labour Party was thrown out in 1951.

The Temporary Chairman: Order. The hon. Gentleman must realise that that does not arise on this Question. Perhaps he will confine himself to the Question.

Sir Rolf Dudley Williams: I was referring to the remarks which have been made in the debate, Sir Herbert. I thought that we were entitled to exchange views and to defend ourselves.
It is my case—and if you had allowed me to continue it would have become apparent—that the Government's policy in raising Income Tax is exactly the same policy which they used when they were last in power. It led not only to devaluation of the £, but to a great reduction in the real purchasing power of the old-age pensioners.
It is significant that at the time Sir Winston Churchill—and I am sure that all of us enjoy being alive today to be able to greet him on his ninetieth birthday—was returned to power, and became Prime Minister in 1951, there were no further increases in the standard rate of Income Tax. In fact, there was a steady reduction. It is significant also that while that reduction was taking place there was a marked reduction in the rate of inflation. It is true that when we were in power old-age pensions rose. I do not think that anyone can deny that, not even the hon. Member for the Western Isles, although he said we allowed inflation to destroy their value. It is quite untrue, and he knows it.

Mr. Malcolm MacMillian: rose—

Sir Rolf Dudley Williams: I am not giving way to the hon. Gentleman till I have finished what I have to say.
The rate of inflation when the Labour Party was in power was 6 per cent. per annum. When we were in power it was 2½ per cent. Now the hon. Gentleman can have his say.

Mr. Malcolm MacMillan: The hon. Gentleman has referred to the point at which the Labour Party went out of office and his party went in and spoke as though from that very dramatic moment everything went well, whereas previously everything went wrong. Has


he forgotten that in the months before the Labour Party went out of office the terms of trade had gone monstrously against this country, due to the Korean War, of course? The hon. Gentleman should read the history of the last twenty years.

Sir Rolf Dudley Williams: They must have a very elementary knowledge of economics in the Hebrides. That is the only way the hon. Gentleman can get away with this sort of thing. In fact, it was because the Labour Party had mismanaged the country's affairs, and it will do exactly the same now. One of the great mistakes that the Government are making is to raise the standard rate of Income Tax.

Mr. Malcolm MacMillan: Mr. Malcolm MacMillan rose—

Sir Rolf Dudley Williams: I am not giving way. The hon. Gentleman has had one go. He can sit down and listen to me for a bit. I have got quite a lot to say, and I do not want to take too long, because I know that some hon. Gentlemen opposite want to get some sleep tonight.
As I said, out of all this money which will come from the pockets of the people due to the rise in the standard rate of Income Tax, some will go to raise the pensions of people like Field Marshal Lord Montgomery. I would not have thought that to be the right approach to social benefits. I would have thought that one ought to be more discriminating. Let us make it perfectly clear what will happen. Everyone will get the flat-rate increase however well paid he may be and whatever his other resources may be. I think that the approach which was made to social benefits by this party when it was in power was far better for the beneficiaries, by giving assistance through supplementary pensions.
What is happening now as a result of the proposals of the Chancellor of the Exchequer? The fact of the increase in the standard rate of Income Tax is already making itself felt on prices. Prices are rising already.

Mr. Percy Holman: They have always been rising.

Sir Rolf Dudley Williams: I was talking to an industrialist this morning who is having a tremendous battle in the

export field, and of whose production 72 per cent. goes for export, and he said that 30 prices had risen last Friday. That is the effect of the policy of the Government.
What is the position of the old-age pensioner? By the time he gets his benefits one thing is certain—the pension he is getting today will not be worth anything like what it is now.
The taxation policy which the Government are following, as I understand it, of raising the standard rate of Income Tax is certainly inflationary. All the evidence which we had when the Labour Party raised the Income Tax when it was last in power certainly leads us to think that inflation is likely to occur. At the same time, the Chancellor, as far as I can follow his policy, is attempting to be deflationary, but there is not the slightest doubt about this, that the Chancellor, even if he is a magnificent jockey, will find that he cannot ride at one and the same time two horses galloping in opposite directions.
What does he want? Does he want inflation or does he not want inflation? Because he must make up his mind. Does he want inflation or does he want deflation? If he is not careful he will get both. He will get inflation and then because of the increase in taxation he will get a collapse in the economy and possibly a sinister slump.
I have never heard of a Government coming to power, and behaving like this, having repeatedly promised, as my right hon. Friend the Member for Barnet (Mr. Maudling) has said, that there would be no rise in taxation. We all know the remark made by my right hon. Friend when he tackled the Prime Minister who denied having said there would be no rise in taxation; but my right hon. Friend was able to bring the transcript of the broadcast in which the Prime Minister made that statement that there would be no rise in taxation. It is not only the scientists and the clever men, upon whom we depend for an increase in our productivity and in our production, who will feel this burden. Right through the economy will this burden be felt.
I believe that the eventual result of it will be that those in receipt of the maximum social benefits will suffer more than anybody else because of the rate of inflation which will ensue, and it is for that


reason that I think the Committee tonight should not support this proposal to increase the standard rate of Income Tax, but should reject it.

Mr. W. Baxter: Having listened with great interest to the many speeches in this debate I must say that I have come to the conclusion that a debate such as this does not enhance the reputation of Parliament. The Clause is an exceptionally important Clause, and it is a pity that hon. Members on both sides of the Committee do not try to realise the need to keep this country on an even keel, which is what I understand the Chancellor of the Exchequer is endeavouring to do. He finds, when he comes to office, a difficult state of affairs.

Sir Rolf Dudley Williams: Very difficult!

Mr. Baxter: Without apportioning blame as to who made it difficult. I think it is right that we should recognise the difficulty which faces this country, but anyone listening to this debate would think that we were a lot of children trying to knock one another about, rather than devoting our time and energy to trying to solve the difficulties which confront us as a nation.
While I do not profess to speak for a great many of the people of this country, but express my own particular point of view here, I am astonished and amazed at the audacity of hon. Members who presume to speak for the executive, who presume to speak for the scientist, who presume to say that all those people who will be called upon to pay the extra contribution by taxation are not prepared to do so.
My experience, for what it is worth, has been entirely different, it seems, from that of other hon. Members who have spoken. Many people—and I employ a quite considerable number of people: over 400, to be exact—who will be in the category of paying the extra taxation do not complain about doing so. I have not heard one complain. Many people have expressed disquiet and dissatisfaction, not at the level of taxation, but at the difficulty which our country has been in, and at the almost impossible position in which the Government find themselves in trying to implement promises which they have made to the pub-

lic to increase and develop the social services. I have not found that those who will be called upon to pay this extra tax have been complaining that the old-age pension should not be increased, or that prescription charges should not be wiped away; but they say that the balance of payments and our situation as a nation should be rectified at the earliest possible moment. We all, irrespective of our incomes, or our station in life, as it were, should do all that is humanly possible, even to the extent of even greater sacrifices, to bring our country to a better position than it is at the moment not only in the eyes of hon. Members on this side or that side of the Committee but in the eyes of the world.
6.30 p.m.
I repeat that the tragedy of our Parliamentary system is beginning to be portrayed very clearly to the eyes of the world. It appears that we oppose for opposition's sake, and try to be clever at each other's expense. I do not think that this is the best way for a modern society to run its system of government, and I would counsel hon. Members to give a little consideration to that aspect of the problems which confront them. [Interruption.] I know that the hon. Gentleman is prone to mumble interjections. He never has the courage to get to his feet to express his point of view.

Mr. Hirst: Who, me?

Mr. Baxter: Yes.?

Mr. Hirst: rose—

Mr. Baxter: Just wait for a moment. I shall give way in due course. I do not like people who interrupt from a seated position. I like them to be more manly and courageous and to get to their feet—

Mr. Hirst: rose—

Mr. Baxter: Just a minute. As I was saying, I like people to get to their feet to express their point of view clearly and concisely, and not adopt the tactics which the hon. Gentleman has adopted from time to time in the past. Right now get up.

Mr. Hirst: If the hon. Gentleman had attended these debates regularly, he would have known only too well what right hon. and hon. Gentlemen on both


sides of the Committee already know, namely, that the one thing which I have never lacked is courage, and he ought to be ashamed of himself for saying what he did.

Mr. Baxter: Courage is something which is in you, or not in you. It is for others to decide, not for you. I have expressed my point of view with regard to your interruptions.

Sir Rolf Dudley Williams: On a point of order. Sir Samuel, I heard the hon. Gentleman making disparaging remarks about the Chair. Is that in order?

The Deputy-Chairman (Sir Samuel Storey): The hon. Member said "You" when he should not have done so. I was going to interrupt, but I did not think that it was worth delaying the Committee.

Mr. Baxter: Sir Samuel, I inadvertently used the word "you" and by doing so brought you into my statement. I humbly withdraw what I said, and perhaps I might make it clear that I was referring to the hon. Member for Shipley (Mr. Hirst) who had the audacity to interrupt when seated.
I feel very strongly about this. I have never taken the view that my right hon. Friend was introducing increased taxation for the sake of doing it, for the gratification of doing it, or for the purpose of making himself unpopular. I have always understood that he was doing it because of the conditions which prevailed when he came to office. I suggest that if a little more study was given to the problem we might find that some of the difficulties have arisen from, and go back to, the great concept that was introduced at the beginning of the last Parliament, five years ago, namely, the E.F.T.A. Agreement. If hon. Gentleman opposite gave a little more study to the problem, they might realise that what has flowed from certain agreements and from certain understandings made by the Government at that time has made the present-day problems more difficult to solve than would otherwise be the case.
I did not intend to intervene in this debate. I implore hon. Members to give a little more consideration not to their own personal advancement by propaganda or by attacks on other

people, but, instead, to the difficulties in which my right hon. Friend found himself when he took over this office. Whatever the reasons for this difficulty—and they have been advanced so often that the country is tired of hearing them—we think that an increase in taxation is the best way to get over our present problems.

Mr. F. A. Burden: At the beginning of his speech the hon. Member for West Stirlingshire (Mr. W. Baxter) was inclined to pour oil on the water and calm down the atmosphere of the debate, but then he did an extraordinary thing. He took a box of matches out of his pocket, lit one, threw it on the oil, and thus blew up the atmosphere again. Most of us would like to look at this problem in a factual way, and the hon. Gentleman should not object if some of us try to point out one or two failings on the part of the party opposite.
The Prime Minister said that there would be no increase in taxation to pay for the social policy of the party opposite. He said that all the improvements would be paid for out of growth. He was challenged on this only a week ago by my right hon. Friend the Member for Barnet (Mr. Maudling) and he replied that he had a transcript of the speech to which reference had been made, and he read from it. My right hon. Friend then pointed out that the Prime Minister had stopped short in his reading of the transcript, and that he had given that undertaking. He invited the Prime Minister to intervene, but the right hon. Gentleman went lower and lower on to his seat rather than stand up and answer the challenge.
The point about this is that although many people—I think most of us—would be prepared to pay extra to ensure that old-age pensioners received more, these proposals mean that the working population will have to pay more to ensure that the standard of living of old-age pensioners, in terms of money, is increased.
Perhaps I might remind hon. Gentlemen opposite of what was said by Mr. Hugh Gaitskell, who was Chancellor of the Exchequer in 1951. In his Budget statement of 1951, despite the fact that there had been raging inflation in all the years since the war, he said that it was


possible to raise only the pensions of men over 70 and women over 65 by 4s. a week from 26s. to 30s. He said that there was to be no increase whatsoever for anybody else.

The Deputy-Chairman: Order. I do not think that we can discuss the rate of pensions when discussing a Clause which deals with the rate of Income Tax.

Mr. Burden: I am pointing out that increases in pensions have to be paid for out of taxation, and I am relating that to the present position. With respect, Sir Samuel, I think that this is germane to the argument, because the then Chancellor of the Exchequer went on to say specifically that this increase would have to be charged on the working population. He also went on to make the important statement that increased taxation means increased prices.
Perhaps I might remind the Chancellor of the Exchequer that on 11th March of this year he, too, admitted that increased taxation means increased prices. If he doubts that he said that, I ask him to look as carefully as I did—and I used this during my election campaign—at his statement. I say that this increase in the standard rate is inflationary, on the admission of the right hon. Gentleman himself. It must increase prices.
Let us suppose that it does increase prices. What will be the situation? The old-age pensioners will have to wait until March before they receive an increase. But there has already been a considerable increase in prices over a whole range of merchandise. I am sure that the Chancellor can easily obtain this information from the Minister of Transport. If he cares to investigate he will find that transport costs for goods have risen considerably. In the case of my own company costs in respect of delivery to the shopes have risen by £750 per annum, and that increase is bound to be passed on to the consumer.

Mr. Arthur Lewis: Where is all this to be found in the Clause?

Mr. Burden: My argument is related to the increase in taxation.

Mr. Callaghan: The increase in Income Tax does not take effect until

next April, so it cannot have had any effect on costs so far.

Mr. Burden: Whether it takes place then or now, the right hon. Gentleman must accept that increased prices will be one of its effects. He has admitted it. If he will look up the record to see what he said on 11th March he will see that I am right—or is it the case that at that time he did not know what he was talking about? It may be that since then he has had a little instruction from Messrs. B and K, and that they have told him that an increase in taxation does not necessarily increase prices. But if what he said then was right perhaps he will change his mind and not go ahead with the proposed increase in Income Tax. The party opposite said that it would raise the money required out of increased production, and if it is getting on with the job it has until next March to increase production.
I will give the Chancellor a lesson, if he will learn it. Within five months of their coming to power in 1951 the Conservative Government increased all pensions to the extent of £80 million a year, and unless—

The Deputy-Chairman: Order. The hon. Member must keep to the terms of the Clause.

Mr. Burden: That is the point, Sir Samuel—I am pointing out that the Conservative Government did it without increasing taxation. The prosperity of the country in five months under a Conservative Government enabled that to be done. Since the right hon. Gentleman and his hon. Friends will have five months in which to do something, they should be able to go ahead in the next Budget without increasing Income Tax.
If we are to believe what the right hon. Gentleman and his party said at the last election, they have the answer, and they can get a terrific spurt on in production. But the threat that is lying over us in the matter of increases in taxation will reduce and not improve our ability to export. It will not increase the possibility of expanding production; it will make it more difficult.
I know that the right hon. Gentleman has had an extremely difficult time since he came to office. But his difficulties are


not only those which he inherited. Those have been largely blown up—because the right hon. Gentleman and his hon. Friends knew that there were balance of payments difficulties. Nothing they have done so far has gone any way to remedy those difficulties. The right hon. Gentleman's real difficulty is that he is not master in his own house. Is his overlord master in his own house?

The Deputy-Chairman: That has nothing to do with the Clause.

Mr. Burden: I have made my point. Whether this action is the direct action of the right hon. Gentleman or of some obscure visionary in the background, the intention is to raise the standard rate of Income Tax by 6d. That is something that we have not seen in 13 years of Conservative rule.

6.45 p.m.

Sir Kenneth Pickthorn: I hope that I may be permitted a few minutes to ask three or four questions of the right hon. Gentleman who is responsible for our finances. I ask most of these questions not as part of the argument but in a genuine search for information. In respect of the first one particularly, I can put my hand on my heart and say that it is not argumentative.
Is this technique of prospective taxation new? If it is not, how old is it, and how frequently has it been used in the past? I do not suggest that the question whether it is a good thing or a bad thing depends upon the amount of precedent; I am clear in my mind—although, with respect, I do not feel so sure that the House is clear—that there are some disadvantages in fixing a rate of tax half a year before it is intended to make it effective. I do not think that any of us has considered what those disadvantages are. Some are very obvious, but there must be many which are not so obvious.
The right hon. Gentleman has had his troubles—although if he looks back in another few weeks he will doubtless think that those troubles were little. Nevertheless, he has had his troubles. But he ought to have had time, before getting into some of the troubles that he has been in lately, to know what were the arguments for and against prospective taxation.
My next question concerns the object of this taxation. I agree that it is a long

while since Governments gave up passing specific taxes tied to specific needs for expenditure. That, long ago, was seen to be a clumsy method, and I am not trying to tie down the Treasury Bench to telling us how much of this taxation is for purpose X and how much for purpose Y, and so on. But some of the right hon. Gentleman's supporters have not hesitated to tell us. Some of them have made it clear that it is wholly, or almost wholly, in order to be kind to persons in receipt of retirement pensions.
Some of them have told us that it was done in order to show the trade unions that the Chancellor—in the hope of obtaining an incomes policy—was going to be fair. But the fact that one wants to show trade unions that one will be fair is not the best of reasons for adding new taxation. Nor is fairness a very easy concept in this connection. Nor is it one which our people find unanimity about. Still less is it one in respect of which people in other countries find it easy to be unanimous with us.
The same hon. and learned Gentleman who comes from one of the Manchester constituencies—at least, I think he is hon. and learned, although I do not really know whether he is silken or hempen—who told us that the purpose was to persuade the trade unions that we were getting on well towards an incomes policy, later told us that it was done in order to show the country as a whole that we were getting on towards an incomes policy. Indeed, I think it was he who went so far as to say that we ought not to do it—that is, put on 6d. extra tax—if it does not tend towards an incomes policy.
I quite understand that the hon. Gentleman was not speaking for his party, nor am I; and no back-bencher must allow himself to be bullied or try to bully others into not following an argument where it leads him, because it has not come straight from the Prime Minister or the Chancellor of the Exchequer. I think that the speeches we have had on this matter today do authorise us to ask the Chancellor to be even unusually specific in indicating which of these arguments he would rely on, or which he thinks jolly good but he would wish to have kept quiet and which he would wish to disclaim. We are entitled to hope for those answers.
There is one more thing only that I want to say; it will not take me two minutes. This taxation was necessary, another of them said, for dealing with the balance of payments and the defence of the £. It is—quotes—"taxation necessary for dealing with"—unquote—and then I think a fair attempt at recapturing the next few words would be the balance of payments and the defence of the £. If it was intended for that, God bless it, but I am bound to say that I do not think the shooting is frightfully accurate. We ought to be told which of these things are the things.
The last small thing I want to say is something about Ph.D's. I think I have known more than anyone else in the House of Commons. I was in at the birth of the Ph.D. I am sure that people will recall that Ph.Ds were called into existence in the year 1919 on the theory that too many Americans went to Germany before the war and, if they could only get something they could call a doctorate here, they would all start coming to British universities. Undoubtedly it has had a good deal of effect on them.

Mr. Arthur Lewis: What has all this to do with the Question?

Sir K. Pickthorn: The question has been posed frequently from the other side, frequently in the form of whether an extra 6d. on Income Tax will deter all these chaps who come here for Ph.Ds from staying and cause them to go back across the Atlantic and cause those on this side to cross the Atlantic once and once only, in order to get back their sixpences and more. Most of this is, I think, exaggerated, but I think it certainly is real.
There is a serious risk of what are called young scientists turning into sorts of sacred cows and it wants watching. Establishment succeeds establishment continuously and it is a rule that anything which the generality of people can deride as establishment has really ceased to be such, and that there is one coming up over the horizon, a quite different, and it may be, a very much worse one; and this one I am sure wants watching.
There is a serious point in 6d., made so by the habit of inflation which this country has had ever since 1915, a ter-

rible, terrible thing to have had, two generations of inflation—sometimes more and sometimes less. The seriousness is a combination of that and heavy taxation, and there are vicious circles in three dimensions. These combinations do cause more people already than ought to have done so to do what many are bound to do: a population of our size with a much greater and richer population next door to it, such a population is bound to run the risk of those people who calculate their careers beforehand, and especially those who do it mainly in terms of money, bound to run the risk of those people disappearing faster than ever; and the passage of this Clause is quite undoubtedly another small step to increasing that risk. The Committee should not take that step without being extremely conscious of what it is doing.

Mr. William Clark: We have had an extraordinary debate. So far as I am concerned, it is extraordinary in that this is the first time that I have spoken from the Opposition Front Bench. It is extraordinary in another way. I think I am right in saying that 122 Amendments have been tabled to this Finance Bill. Of these, 17 represent second thoughts on the part of the Chancellor, five have been tabled by the Liberal Party—they are mainly duplicates of Conservative Amendments—three come from the Government back benches and two of them are duplicates of Amendments put down by my hon. Friends. The Opposition have tabled 93 Amendments. I should have thought this an indication of our serious and constructive approach.
We have had a very wide debate on the Question, "That the Clause stand part of the Bill". I hope that it will be in order to have a look at the impact of the provision in Clause 1 of a 6d. increase on Income Tax in the light of what the Government put out preceding the publication of the Finance Bill. In the Gracious Speech it was stated
To the end that all may share the benefits of rising productivity. My Ministers will work for more stable prices …
We should also have a look at what was stated in the White Paper, The Economic Situation, of 20th October. In paragraph 7 it says:
… there is no undue pressure on resources calling for action.


Paragraph 8 goes on to say:
An attack must be made on the problem of increasing prices.
From the number of questions posed to the Chancellor and the obviously foreshadowed pension increase, which has figured largely in the debate, I think it would be for the benefit of us all if we asked ourselves what the Chancellor has proposed.
Pensions are to cost £300 million. National Assistance will cost £23 million, prescription charges £22 million—which is a total of social benefits amounting to £345 million. How does the Chancellor suggest that he shall collect the money? A sum of £215 million will come from the increase in the National Insurance contribution, which leaves £130 million for the Chancellor to find in order to pay for the social benefits. Presumably, the import surcharge of 15 per cent. will produce £200 million. The export rebate will cost £75 million and, as a consequence, the Chancellor will get from the import surcharge a net revenue of £125 million. So, if our social benefits are to cost £130 million net, we have revenue for that amounting to £125 million. I do not think that anyone will argue about the difference of £5 million. Why, therefore, is it necessary to increase taxation? Why increase Income Tax? No doubt, Sir Samuel, you would rule me out of order if I ventured into the realms of the petrol tax, but taking Income Tax alone, why is it necessary—when the Chancellor has got most of the increase in the social services paid for—to increase Income Tax?
I would remind the Chancellor that the previous Socialist Chancellor of the Exchequer also increased Income Tax by 6d. That was in 1951. I am sure that the right hon. Gentleman has not done this merely to remain in step with the late Mr. Hugh Gaitskell.
So much has been said during this debate about what has happened over the past 13 years, that I think it would be a salutary lesson, particularly to many Members who probably have not been reading what has been happening, to point out that in the last 13 years a Conservative Government reduced Income Tax at the standard rate by 1s. 9d. in the £ and, as my hon. Friend the Member for Tynemouth (Dame Irene Ward) said, at the same time increased social benefits five times for the old-age

pensioners. We also increased the Income Tax allowances.
7.0 p.m.
The hon. Member for Liverpool, Walton (Mr. Heffer) made great play about Purchase Tax and indirect taxation. I hope that he will look at the figures carefully, because Purchase Tax in the last 13 years has been considerably reduced by the Conservative Government and the percentage of the gross national product taken by indirect taxation before this Budget was lower in 1964 than it was in 1951. We must remember these things, and I think it would be as well if we did not bandy across the Floor of the Committee these wild accusations, which are absolutely baseless.
My right hon. Friend the Member for Barnet (Mr. Maudling), with his usual ability to forecast what will happen, said during the election that one of the results of a Labour Government, particularly with all their manifestoes and promises, would be an increase of 9d. in the £ on Income Tax. My right hon. Friend was wrong—in fact we have an increase of only 6d. at the moment. I am sure that the Chancellor of the Exchequer will remember that when he read of my right hon. Friend talking about 9d. Income Tax increase if the Socialists were elected, he said in his speech on 14th October in Cardiff:
Infants school stuff … nursery school stuff. Hardly worth serious attention … these figures of Mr. Maudling are getting screwier and screwier.
He was right to the extent of two-thirds, for we have had 6d. of the foreshadowed 9d. increase in this Clause. I hope that the Chancellor will make some reference to his Cardiff speech when he replies, because many of us on this side of the Committee, and I am sure hon. Gentlemen behind him, are rather worried about how the future Chancellor in October, 1964, during the General Election, implied that taxes need not go up.
The hon. Member for Walton queried an accusation by one of my hon. Friends, that the present Prime Minister said that there would be no general increase in taxation. I remind him that in an I.T.V. broadcast on 15th September, when he was asked, "Will your proposals involve increases in taxation?", the Prime Minister said:
No. Over the period of a Parliament I believe we can do it certainly without any general increase in taxation.


I would have thought, as my hon. Friend pointed out, that this was an indication to the electors of this country that all these grandiose promises and schemes put forward by the Socialist Party could be paid for without any general increase in taxation. Today these chickens are coming home to roost.
I cannot see how hon. Gentlemen opposite can say that this is taking money—and I paraphrase—from the rich to pay to the poor. I hope that I have established the argument that there is no necessity to increase Income Tax if it is only to pay for old-age pensions or social benefits, whether it be prescription charges or National Assistance. How, then, can they say that they are taking money from the rich in order to pay the poor when 6,500,000 people in this country will have to pay higher taxation because of Clause 1. I must remind the Committee that the present Prime Minister said, as reported in The Times on 20th May:
We must streamline our tax system so that those who earn money will get a better deal.
This is the whole burden of the argument of my hon. Friends against this increase of 6d. in the standard rate. As my hon. Friends the Members for Scarborough and Whitby (Sir A. Spearman) and Cardiff, North (Mr. Box) said, this will penalise the young executives. I urge hon. Gentlemen to look at the supplementary Financial Statement issued by the Government, from which they will see that if one earns over £700 a year and one is single, Clause 1 affects one's tax payments. The burden of my hon. Friend's argument is that if we take a young up-and-coming executive earning between £700 and £2,500 a year, he will pay considerably more tax.
It is all very well for the Chancellor of the Exchequer to say, "Oh, yes but the rate will not be very much—ten bob a week. What is 10 bob a week?" It has also to be remembered that not only will a man pay increased tax of 10s. a week, he will also, from 29th March next year, have to pay 2s. a week extra in National Insurance contributions. This affects people throughout the whole sphere. Whether one earns £400 or £4,000 a year, one will still have to pay this 2s. a week extra.
The only thing I could not agree with in the speech of my hon. Friend the

Member for Shipley (Mr. Hirst) was his remark about his "new-found respectability." I have always considered him respectable and I have always thought him to have the courage to stand on his feet and to say exactly what he thinks, whether against the Opposition or against the Government of the day. I think that my hon. and gallant Friend the Member for Harrow, East (Commander Courtney) had a valid point about reduced rates and further allowances for those who help elderly people. Hon. and right hon. Gentlemen opposite must accept the fact that we should give these allowances if we are increasing taxation by 6d. in the £ standard rate. Where is the social justice in letting this increase go right over the field of taxation? Surely it should have been more discriminatory. Why should the reduced rate relief apply only to the first £300? Why was this level not increased? The ingenious Amendment of my hon. Friend the Member for Shipley, which unfortunately was not called, give a certain amount of increase in reduced rate relief.
I think I am right in saying that only on the present Clause may I talk about allowances. Nothing in the Clause helps people with small incomes. There is an age relief or age exemption relief. I should like to know what the Chancellor has to say about this. In opposition, the present Government were very strong in their comments about helping the old, the needy, the sick and people on small incomes. Why are they so silent now? Why have they not tabled Amendments to the Finance Bill? Why did they not support my hon. Friend the Member for Tynemouth, in her excellent intervention on behalf of people on fixed incomes? What we have to do is to have another look at the background of the Clause to see what is the effect of the increase of 6d. in Income Tax.
I have said that the increased National Insurance contribution of 2s. for all employed people will hit all, irrespective of income. This follows the point of the hon. Member for The Hartlepools (Mr. Leadbitter), who complained that the official statistics were wrong and that average earnings were not over £17 a week but that his statistics gave them as £12 a week. All we can say to him is that it does not matter whether one is earning £12 or £17 a week, one will still


have to pay 2s. a week extra in National Insurance contribution.
There is one other matter of grave omission, and I am sure that the Chancellor of the Exchequer will pay some attention to this. It is a grave omission that nowhere in the Queen's Speech, in the White Paper—and only belatedly in the Budget Statement—have savings been mentioned. Savings are vital to the country, and any fair-minded person must accept that the increase of 6d. in the standard rate of tax must affect savings. It may be that for a man on £1,500 to £2,000 a year the Income Tax goes up by £20 to £25 a year. If we assume that he has been saving £40 to £50 a year, we must ask where he will find the extra taxation. I suggest that he can find it only from a reduction in his savings.
One of the main recommendations of N.E.D.C. before the election was that small savings must be increased. What does the present, reconstituted N.E.D.C. think of the Budget? Does it think that the increase of 6d. in the standard rate will reduce savings? Or does not the Chancellor know what it thinks, in view of the fact that, unfortunately, he is not a member of it? It will be disastrous for our economy if the Chancellor of the Exchequer is not a member of that all-powerful body.
In his Budget statement the Chancellor said that the increase of 6d. in Income Tax and the increase in petrol duty will help the balance of payments. As my hon. Friends have pointed out in numerous speeches, this additional 6d. can only add to the costs of industry and act as a disincentive to the higher executive. How will it help exports? The increased National Insurance contribution and the imports surcharge have already taken care of the extra cost of the social services. How can the extra 6d. on Income Tax help our balance of payments? If the Chancellor wants to help our balance of payments, why does he increase Income Tax by 6d. and at the same time upset people by mentioning a corporation tax and a capital gains tax without giving the structure of those two taxes? This has led to a tremendous amount of uncertainty, as was pointed out by my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid).
One of the main arguments against the increase of 6d. in Income Tax arises

from the fact that the Labour Party say that they must increase taxation in order to pay for increased social services, yet it is known from their own figures that the increased social services will be paid for by taxes other than the new Income Tax and the petrol duty. What can one think for the future of the country except that for doctrinaire reasons, or for some other reason still extremely obscure to us, a 6d. increase in the standard rate has been added to the costs of industry. We think that this increase is totally irrelevant to our overseas trading position, and I hope that my hon. and right hon. Friends will register their protest in the Lobby.

7.15 p.m.

Mr. Callaghan: I congratulate the hon. Member for Nottingham, South (Mr. Wiliam Clark) on his maiden speech from the Front Bench. That is always an ordeal. As we know from our past experience of him, he always marshals his facts clearly and well and presents them concisely, even though I usually find myself in disagreement with him. I expect that I shall find myself in continuous disagreement with him as the Bill proceeds. Nevertheless, it is always a pleasure to hear the way in which the hon. Member puts his case.
We have had a far-ranging debate going all the way from sacred cows to Suez via the standard rate, and the Committee will agree that practically no facet of the increase has not been debated at some length. I will deal, first, with what I might call the technique. The hon. Baronet the Member for Carlton (Sir K. Pickthorn), in what was an unusually benign speech for him, asked about the technique. Increases in taxation have been announced beforehand in earlier years. I will quote some which come to my mind, and others have been given to me. The speculative gains tax, which the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) introduced, was announced by him in July, 1961. The right hon. Member for Barnet (Mr. Maudling) announced substantial changes in the capital allowances in October or November in the course of one year. The standard rate of Income Tax has been altered in the course of one year.
I do not argue from precedent particularly, because I think that one always


ought to look at these matters on their merits. I looked at the advantages and disadvantages, and I thought that there were more advantages than disadvantages in this course. I do not give to the annual Budget quite as high a place as tradition seems to give it in that sense, and I think that this has been the feeling of the House of Commons over the last few years. By the use of the regulators, the right hon. Member for Barnet showed that he needed—and maybe we shall need—to adjust the pressure of demand during the course of a year apart from what one does in April of any year. I therefore do not think that we should adhere strictly to the notion that changes in tax must always be announced as from 6th April in any year.

Sir K. Pickthorn: With respect and benignity, the right hon. Gentleman does not get away from the importance of the annual Budget by announcing taxation six months before it. One Parliament cannot bind a succeeding Parliament, still less can one announcement to one House of Commons bind the same House of Commons six months later. It will depend on what happens in the Budget.

Mr. Callaghan: I fully accept that. I prefer the hon. Gentleman's benignity to his malignity, and it was very pleasant to see his benignity this afternoon. But he is right. One cannot bind anybody in that way, any more than the right hon. Member for Barnet was binding the Budget of the following April when he announced substantial changes in capital allowances.
Nevertheless, for reasons of administrative convenience and convenience to the taxpayer, I thought, and think, it right —and even more right now that we have a P.A.Y.E. system, which is a fairly recent development in taxation terms in this country—to make this announcement. Changes of taxation announced in April, because of the operation and the relative slowness of the system, cannot come into force until about July or August. Therefore, any changes in liability are concentrated in a period of eight or nine months. An advance announcement at least enables them to be spread over the whole 12 months. From the point of view of the taxpayer's convenience, there is much to be said for that.
This is not to say that we should make a general rule of it, nor do I say that we should be slaves to convention. As I said in my Budget statement, the announcement enables the Inland Revenue to get ahead with the recoding work—assuming that the House gives us the Finance Bill—in January. They will, therefore, have that out of the way by the time the Income Tax year starts. That is the technical reason for my decision. The Committee can argue about it on constitutional grounds, but I do not think that I have invalidated any great constitutional principle.

Mr. Norman Cole: Would the right hon. Gentleman refer to col. 1037 of HANSARD of 11th November? He will find that he said that in increasing the standard rate of tax he did not propose to make a corresponding increase in the reduced rates of tax charged on the first £300 of taxable income. Will he next refer to subsection (2) of the Clause, where he will find that there are corresponding increases. Will he clarify that point?

Mr. Callaghan: I noticed that and inquired into it. This is a technical matter of drafting. I could explain it if I were to go into great detail, but it is technical. I am satisfied that it makes no difference to the charge in those cases.

Mr. Cole: That is most comforting to me but, considering the position a few months ahead—the position that will arise after April of next year—can the right hon. Gentleman say whether there was any kind of Parliamentary sanction behind what he was good enough to tell the House of Commons on 11th November?

Mr. Callaghan: I do not have those words before me. Had the hon. Member had the good fortune to catch the Chairman's eye during the debate he would have had a chance to mention that to me and I could have had the matter looked up. Unfortunately, I cannot go into the matter at greater length now, but I assure him that I will look into it.
I turn to the substance of the debate. The Clause, in raising the standard rate by 6d. but not altering the reduced rates, will bring an additional yield of £122 million to the Revenue in a full year. I have been asked to divide this amount up and to say how much of it will go


on pensions, how much for prescription charges, and how much for other purposes. The hon. Lady the Member for Tynemouth (Dame Irene Ward), who asked me to do this, has been an hon. Member for a long time and, while I have not been here quite as long as she has, I am sure that she is as well aware as I am that the revenue and expenditure both form part of a reservoir or pool. Therefore, it is not possible for me to divide up exactly what would be the amount that would go into any particular section or would be drawn out from any section in this way.
With respect to the hon. Member for Nottingham, South, I thought that in what I would call an accurate accountant's approach he neglected the other major aspect: that is, to measure the pressure of demand. Taxation changes, as his right hon. Friend has always emphasised, must be either questions of raising more revenue, or of altering the pressure of demand. This, I think, is the reason why modern Budgets are so much more complicated than they were when I first came here; simply because one must regard both these considerations.
I say to the hon. Member for Nottingham, South that I could have increased the borrowing requirement. I need not, in that sense, have raised the standard rate, but if I had increased the borrowing requirement I would, in my view, then have put such inflationary pressure on the economy that it would have been improper, dishonest—perhaps not dishonest, but certainly improper—and reckless to have done it in that way.
I am not ashamed to stand by what I said at the time of the election—that I do not want to cash the cheques until I have got the money in the till. That may have been a rather rough and ready way of expressing this thought, but I believe that it is right, and that people outside the Committee accept that it is right, that one should relate the additional benefits which the country as a whole wants conferred on particular groups to the capacity of the country to pay, and to the total charge that has to be made.
I believe that that is something the country will respond to and that is why, despite the fury of some of the speeches

to which we have listened this afternoon, I do not find them matched by the fury of people outside. Of course people do not like paying extra taxation. However, if they know that something is fair then, on the whole, they accept that it is fair and right that they should pay. That is why although hon. Members opposite will decide their own tactics this evening, I doubt whether they will get much advantage out of voting against this increase. Indeed, I am not sure why they will vote against it.
We have heard a number of arguments from the benches opposite. Some hon. Members say that the rate of Income Tax should not be raised. Others say that it should be raised, but in different ways. The hon. Member for Scarborough and Whitby (Sir A. Spearman) said that he did not object to it being raised in this way. I agree with his quotation from Lord Waverley's remarks on the question of inequality. As I understand, Lord Waverley said that one test of what one does about taxation should be whether the level of human needs is too low. I expected to hear hon. Members opposite say, "I agree. The human needs of the pensioners are too low and Lord Waverley would have agreed, in these circumstances, that the increase in Income Tax should take place".
Remembering Lord Waverley as I do—and I seem to recall the occasion when he made that speech—I believe that he quite possibly would have said that, because he had a fine measure and balance in his mind for these considerations. That is the measure and balance I ask hon. Members opposite to apply tonight. Do they think, taking both the requirement of the Exchequer and the need to ensure that there is no undue pressure of demand, that I should have postponed the introduction of the increase in pensions or that I should not have increased taxes at the same time?
This is the question which no hon. Member opposite has answered. They have used the prerogative of all Oppositions throughout the ages of saying that they desire the ends, but are not willing to give us the means. That is happening over pensions. Of course they want higher pensions. Indeed, they want us to do more than we are doing. I recall hearing the right hon. Member for Leeds, North-East (Sir K. Joseph), speaking with


all the authority of the Front Bench opposite, attacking my right hon. Friend the Minister of Pensions and National Insurance because she was not paying the benefits soon enough or big enough.
I suppose that Oppositions have done this in the past. I have no doubt that oppositions will do it in the future. This present Opposition are certainly doing it now. Nevertheless, I beg them not to believe that there is any particular currency in their doing it in this way. There is not, and there is no particular kudos in their doing it in this way. People recognise that benefits and payments go together. That is what we are trying to do. [Interruption.] I hear an hon. Member opposite reminding me of the election. There is nothing I said at the time of the election that can be quoted against me now. Indeed, the right hon. Member for Barnet (Mr. Maudling) used to quote me in his own defence. He used to quote from a debate in which I intervened—I think that it was about last May—to say that no responsible Government could go beyond his programme. As I say, he used to quote that in his own defence. He quoted it at the time of the election to say that we could not do it.
The whole Committee should face the fact—and I know that the right hon. Member for Barnet appreciates this—that in the post-Plowden era the previous Government, with rolling programmes for housing, schools, education, defence and all the other matters, committed us. I do not complain about that. But they looked forward into the future and committed the nation to expenditure up to the year 1968–69 based on three considerations.
The first was a permanent 4 per cent growth rate. The second was a constantly increasing level of savings and the third was possibly some higher measure of taxation. I do not know whether the right hon. Member for Barnet wants to take issue with that, but my investigations show that it is possible that his programme would have meant a possible increase—I go no further than "possible increase"—in the level of taxation to fulfil programmes that now exist.
The first thing that has gone wrong is that, unfortunately, the right hon. Gentleman has not produced the 4 per cent.

growth rate. We will not get 4 per cent. this year and, in these circumstances, decisions will have to be taken, and there will have to be reviews, about the general levels of expenditure.

Mr. Reginald Maudling: The right hon. Gentleman is right in what he says about the level of expenditure to which we had committed ourselves. That was made clear in our White Paper. However, the point I made was to welcome the responsibility of the attitude which he took on these matters, but, at the same time, to regret the fact that his colleagues did not take the same attitude.

Mr. Callaghan: That is not true. If the right hon. Gentleman looks at the speeches which have been made on this subject—and I see no reason to depart from any of them—he will see that we have said that if we can get back—indeed, I will not say "if," because it must be the imperative task of the country to do it—rather, when we get back to a 4 per cent. growth rate, then I think that over the period of the lifetime of a Parliament it will be possible to do these things. But the dilemma in which the country finds itself now is that it does not have a 4 per cent. growth rate, and it does not look like getting it for the rest of this year, particularly since 11 months of it have already gone and we are now virtually in the twelfth month of the year.
The twin tasks of the Government must be to get our balance of payments under control, as we shall next year, and, at the same time to achieve a 4 per cent. growth rate. Otherwise the programme which the right hon. Gentleman published a year ago will not be meaningful in the present context. This is a problem for the whole Committee. All hon. Members must face it and I hope that during the time I occupy the office I now hold I will not attempt to dodge these very difficult problems which the nation as a whole must face. The nation wants more roads, and more quickly. The nation wants more housing, and more quickly. This means that we must get this rate of growth in the national product as quickly as we can. But, at the same time, we have to try to get the balance of payments under control.
7.30 p.m.
I am not opening old sores, but I think that it will be common ground on both sides of the Committee that we can get


a fairly rapid rate of growth if we do not keep the balance of payments under reasonable control. Of course, we can; we have done it. But then we are faced with the difficulty of trying to get that under control, and in its turn—this was the first imperative at the time in the conditions of the first five weeks in which we found ourselves—this means slowing down the rate of growth.
I have said, and, of course, it is true, that a 7 per cent. Bank Rate has its immediate effect on the international situation, but I would be foolish to deny that in time it must work its way through to the domestic economy. We are now putting the balance of payments right, and in reducing the swollen deficit, we are, in fact, hampering our rate of growth. But as I understand it, people of all nations today, and especially our own, demand that we should live within our means, that we should have a higher standard, and that we should play our part in the world. This is a problem to which, I think, the whole nation has to devote its attention. [Interruption.] If we do not, we shall then get the brain drain.
I come to the point about the so-called brain drain. I very much doubt whether the difference in taxation of 6d. in the £ on this level of incomes will mean the difference between a man emigrating or staying at home. I have already shown in my intervention to the hon. Member for Ilford, South (Mr. Cooper)—I am sorry that he is not in his place—that he grossly exaggerated the additional cost. He exaggerated it by five times and that is no way in which to encourage our young scientists to stay. We all have our own views about this and examinations have been made of it. If I had to state what I regard as prime factors in encouraging the scientists and technologists to go abroad, as well as the taxation levels, I would enumerate three.

First, the level of salaries which are payable—for example, in the United States. That is where we start. Secondly, the facilities they are afforded in doing their research and the other technical work in which they are involved. I have heard this argument time and time again by our young men, whom I have seen in the United States, "We get better facilities here than in the United Kingdom". The third reason, apart from taxation which has been mentioned, is the status they have in the societies over there, whereas here I do not believe that our scientists and technologists are given the status in industry that their qualifications deserve.

Of course, it is the job of the Opposition to isolate the one factor that hits the Government, but I would say that there are these other factors. The level of taxation is one of them, but in this case I would say frankly not a very important one, because I have attempted, in raising the standard rate by 6d., to ensure that we at least try to keep out, or increase only slightly the liability of, those who are at the bottom of the income scale.

I think that hon. Members know me well enough to know that I do not increase Income Tax for the sake of popularity. I believe that in this case it is a stern necessity. It is one which I regret doing, but I know that our people, faced with the choice between leaving the pensioners at the level they were at, or increasing the standard rate in the way that I have done, would choose the increase in the standard rate, and for that I ask the Committee to support the Government.

Question put, That the Clause stand part of the Bill:—

The Committee divided: Ayes 232, Noes 197.

Division No. 12.]
AYES
[7.35 p.m.


Albu, Austen
Bishop, E. S.
Callaghan, Rt. Hn. James


Allaun, Frank (Salford, E.)
Blackburn, F.
Carter-Jones, Lewis


Alldritt, W. H.
Blenkinsop, Arthur
Castle, Rt. Hn. Barbara


Allen, Scholefield (Crewe)
Boardman, H.
Coleman, Donald


Armstrong, Ernest
Boston, T. G.
Conlan, Bernard


Atkinson, Norman
Bowden, Rt. Hn. H. W. (Leics S. W.)
Corbet, Mrs. Freda


Bacon, Miss Alice
Bowen, Roderic (Cardigan)
Craddock, George (Bradford, S.)


Bagier, Gordon A. T.
Bowles, Frank
Crawshaw, Richard


Barnett, Joel
Boyden, James
Crosland, Anthony


Baxter, William
Braddock, Mrs. E. M.
Grossman, Rt. Hn. R. H. S.


Beaney, Alan
Broughton, Dr. A. D. D.
Cullen, Mrs. Alice


Bellenger, Rt. Hn. F. J.
Brown, Hugh D. (Glasgow, Provan)
Dalyell, Tam


Bence, Cyril
Buchan, Norman (Renfrewshire, W.)
Darling, George


Bessell, Peter
Butler, Herbert (Hackney, C.)
Davies, G. Elfed (Rhondda, E.)


Binns, John
Butler, Mrs. Joyce (Wood Green)
Davies, Harold (Leek)




Davies, Ifor (Gower)
Jones, Dan (Burnley)
Prentice, R. E.


Davies, S. O. (Merthyr)
Jones, J. Idwal (Wrexham)
Probert, Arthur


Delargy, Hugh
Jones, T. W. (Merioneth)
Pursey, Cmdr. Harry


Dell, Edmund
Kelley, Richard
Rankin, John


Dempsey, James
Kenyan, Clifford
Redhead, Edward


Diamond, John
Kerr, Dr. David (W' worth, Central)
Rees, Merlyn


Dodds, Norman
Lawson, George
Rhodes, Geoffrey


Doig, Peter
Leadbitter, Ted
Richard, Ivor


Donnelly, Desmond
Ledger, Ron
Roberts, Albert (Normanton)


Duffy, Dr. A. E. P.
Lee, Miss Jennie (Cannock)
Robertson, John (Paisley)


Dunn, James A.
Lever, Harold (Cheetham)
Rodgers, William (Stockton)


Dunnett, Jack
Lewis, Arthur (West Ham, N.)
Rogers, George (Kensington, N.)


Edelman, Maurice
Lewis, Ron (Carlisle)
Rose, Paul B.


Edwards, Rt. Hn. Ness (Caerphilly)
Lipton, Marcus
Ross, Rt. Hn. William


Edwards, Robert (Bilston)
Lomas, Kenneth
Rowland, Christopher


English, Michael
Loughlin, Charles
Sheldon, Robert


Ensor, David
Lubbock, Eric
Shinwell, Rt. Hn. E.


Evans, Albert (Islington, S. W.)
McBride, Neil
Short, Rt. Hn. E. (N 'c' tle-on-Tyne, C.)


Fernyhough, E.
MacColl, James
Short, Mrs. Renèe (W'hampton, N. E.)


Finch, Harold (Bedwelty)
MacDermot, Niall
Silkin, John (Deptford)


Fitch, Alan (Wigan)
McGuire, Michael
Silkin, S. C. (Camberwell, Dulwich)


Fletcher, Sir Eric (Islington, E.)
McInnes, James
Silverman, Sydney (Nelson)


Fletcher, Ted (Darlington)
McKay, Mrs. Margaret
Skeffington, Arthur


Fletcher, Raymond (Ilkeston)
Mackenzie, Gregor (Rutherglen)
Slater, Mrs. Harriet (Stoke, N.)


Floud, Bernard
Mackie, John (Enfield, E.)
Slater, Joseph (Sedgefield)


Foley, Maurice
McLeavy, Frank
Snow, Julian


Foot, Sir Dingle (Ipswich)
MacMillan, Malcolm
Solomons, Henry


Foot, Michael (Ebbw Vale)
Mahon, Peter (Preston, S.)
Sorensen, R. W.


Freeson, Reginald
Mahon, Simon (Bootle)
Soskice, Rt. Hn. Sir Frank


Garrett, W. E.
Mallalieu, E. L. (Brigg)
Spriggs, Leslie


Garrow, A.
Mallalieu, J. P. W. (Huddersfield, E.)
Stones, William


Ginsburg, David
Manuel, Archie
Stross, Sir Barnett (Stoke-on-Trent, C.)


Gregory, Arnold
Mapp, Charles
Swain, Thomas


Grey, Charles
Mason, Roy
Symonds, J. B.


Griffiths, Rt. Hn. James (Llanelly)
Mendelson, J. J.
Taylor, Bernard (Mansfield)


Grimond, Rt. Hn. J.
Mikardo, Ian
Thomas, George (Cardiff, W.)


Gunter, Rt. Hn. R. J.
Millan, Bruce
Thomas, Iorwerth (Rhondda, W.)


Hale, Leslie
Miller, Dr. M. S.
Thornton, Ernest


Hamilton, James (Bothwell)
Molloy, William
Thorpe, Jeremy


Hamilton, William (West Fife)
Monslow, Walter
Tinn, James


Hamling, William (Woolwich, W.)
Morris, Alfred (Wythenshawe)
Tuck, Raphael


Harper, Joseph
Morris, Charles (Openshaw)
Urwin, T. W.


Harrison, Walter (Wakefield)
Morris, John (Aberavon)
Varley, Eric G.


Hart, Mrs. Judith
Mulley, Rt. Hn. Frederick (SheffieldPk)
Walden, Brian (All Saints)


Hayman, F. H.
Murray, Albert
Walker, Harold (Doncaster)


Hazell, Bert
Neal, Harold
Wallace, George


Heffer, Eric S.
Newens, Stan
Warbey, William


Herbison, Rt. Hn. Margaret
Noel-Baker, Rt. Hn. Philip (Derby, S.)
Watkins, Tudor


Hill, J. (Midlothian)
Oakes, Gordon
Weitzman, David


Hobden, Dennis (Brighton, K'town)
Oram, Albert E. (E. Ham S.)
Wells, William (Walsall, N.)


Holman, Percy
Orbach, Maurice
Whitlock, William


Horner, John
Orme, Stanley
Wilkins, W. A.


Houghton, Rt. Hn. Douglas
Oswald, Thomas
Willey, Rt. Hn. Frederick


Howarth, Harry (Wellingborough)
Owen, Will
Williams, Alan (Swansea, W.)


Howell, Denis (Small Heath)
Padley, Walter
Williams, W. T. (Warrington)


Howie, W.
Page, Derek (King's Lynn)
Willis, George (Edinburgh, E.)


Hughes, Emrys (S. Ayrshire)
Palmer, Arthur
Wilson, William (Coventry, S.)


Hunter, Adam (Dunfermline)
Pannell, Rt. Hn. Charles
Winterbottom, R. E.


Hunter, A. E. (Feltham)
Park, Trevor (Derbyshire, S. E.)
Woodburn, Rt. Hn. A.


Irvine, A. J. (Edge Hill)
Pavitt, Laurence
Woof, Robert


Irving, Sydney (Dartford)
Pearson, Arthur (Pontypridd)
Wyatt, Woodrow


Janner, Sir Barnett
Pentland, Norman



Johnston, Russell (Inverness)
Popplewell, Ernest
TELLERS FOR THE AYES:




Mr. Gourlay and Mr. McCann




NOES


Agnew, Commander Sir Peter
Black, Sir Cyril
Clark, William (Nottingham, S.)


Alison, Michael (Barkston Ash)
Box, Donald
Clarke, Brig. Terence (Portmth, W.)


Anstruther-Gray, Rt. Hn. Sir W.
Brewis, John
Cole, Norman


Astor, John
Bromley-Davenport, Lt.-Col. Sir Walter
Cooke, Robert


Atkins, Humphrey
Brooke, Rt. Hn. Henry
Cooper, A. E.


Awdry, Daniel
Brown, Sir Edward (Bath)
Cooper-Key, Sir Neill


Baker, W. H. K.
Bruce-Gardyne, J.
Corfield, F. V.


Balniel, Lord
Buchanan-Smith, Alick
Costain, A. P.


Barlow, Sir John
Buck, Antony
Courtney, Cdr. Anthony


Batsford, Brian
Bullus, Wing Commander Eric
Craddock, Sir Beresford (Spelthorne)


Bell, Ronald
Burden, F. A.
Crosthwaite-Eyre, Col. Sir Oliver


Berkeley, Humphry
Butler, Rt. Hn. R. A. (Saffron Walden)
Crowder, F. P.


Berry, Hn. Anthony
Campbell, Gordon
Cunningham, Sir Knox


Biffen, John
Carlisle, Mark
Curran, Charles


Biggs-Davison, John
Channon, H. P. G.
Currie, G. B. H.


Bingham, R. M.
Chataway, Christopher
Dalkeith, Earl of


Birch, Rt. Hn. Nigel
Chichester-Clark, R.
Davies, Dr. Wyndham (Perry Barr)







d'Avigdor-Goldsmid, Sir Henry
Irvine, Bryant Godman (Rye)
Page, R. Graham (Crosby)


Dean, Paul
Jennings, J. C.
Percival, Ian


Deedes, Rt. Hn. W. F.
Jones, Rt. Hn. Aubrey (Hall Green)
Peyton, John


Digby, Simon Wingfield
Jopling, Michael
Pickthorn, Sir Kenneth


Dodds-Parker, Douglas
Kerby, Capt. Henry
Pitt, Dame Edith


Doughty, Charles
Kerr, Sir Hamilton (Cambridge)
Powell, Rt. Hn. J. Enoch


Drayson, G. B.
Kershaw, Anthony
Price, David (Eastleigh)


du Cann, Edward
Kilfedder, James A.
Prior, J. M. L.


Eden, Sir John
King, Evelyn (Dorset, S.)
Quennell, Miss J. M.


Ellott, R. W. (N'c'tle-upon-Tyne, N.)
Kitson, Timothy
Rawlinson, Rt. Hn. Sir Peter


Emmet, Hn. Mrs. Evelyn
Lagden, Godfrey
Rees-Davies, W. R.(Isle of Thanet)


Fell, Anthony
Lambton, Viscount
Ridsdale, Julian


Fletcher-Cooke, Charles (Darwen)
Langford-Holt, Sir John
Roberts, Sir Peter (Heeley)


Fletcher-Cooke, Sir John (S'pton)
Legge-Bourke, Sir Harry
Robson Brown, Sir William


Forrest, George
Litchfield, Capt. John
Roots, William


Foster, Sir John
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Russell, Sir Ronald


Fraser, Rt. Hn. Hugh (St'fford &amp; stone)
Lloyd, Ian (P'tsm'th, Langstone)
Scott-Hopkins, James


Fraser, Ian (Plymouth, Sutton)
Lloyd, Rt. Hn. Selwyn (Wirral)
Sharples, Richard


Gammans, Lady
Loveys, Walter H.
Shepherd, William


Gardner, Edward
Lucas-Tooth, Sir Hugh (Hendon, S.)
Sinclair, Sir George


Gibson-Watt, David
McAdden, Sir Stephen
Spearman, Sir Alexander


Gilmour, Sir John (East Fife)
McLaren, Martin
Stainton, Keith


Glover, Sir Douglas
MacIeod, Rt. Hn. Iain
Talbot, John E.


Gower, Raymond
McMaster, Stanley
Taylor, Edward M. (G' gow, Cathcart)


Grant, Anthony
McNair-Wilson, Patrick
Temple, John M.


Grant-Ferris, R. (Nantwich)
Maginnis, John E.
Thatcher, Mrs. Margaret


Grieve, Percy
Marten, Neil
Thomas, Sir Leslie (Canterbury)


Griffiths, Eldon (Bury St. Edmunds)
Maude, Angus E. U.
Thompson, Sir Richard (Croydon, S.)


Griffiths, Peter (Smethwick)
Maudling, Rt. Hn. Reginald
Tiley, Arthur (Bradford, W.)


Hall John (Wycombe)
Maxwell-Hyslop, R. J. (Tiverton)
Turton, Rt. Hn. R. H.


Hall-Davis, A. G. F. (Morecambe)
Maydon, Lt.-Cmdr. S. L. C.
Tweedsmuir, Lady


Hamilton, Marquess of (Fermanagh)
Meyer, Sir Anthony
Van Straubenzee, W. R.


Harris, Frederic (Croydon, N. W.)
Mills, Peter (Torrington)
Vaughan-Morgan, Rt. Hn. Sir John


Harris Reader (Heston)
Mills Stratton (Belfast, N.)
Walder, David (High Peak)


Harrison, Col. Sri Harwood (Eye)
Miscampbell, Norman
Walker, Peter (Worcester)


Harvey, John (Walthamstow, E.)
Mitchell, David
Walker-Smith, Rt. Hn. Sir Derek


Hawkins, Paul
Monro, Hector
Walters, Dennis


Hay, John
More, Jasper
Ward, Dame Irene


Heald, Rt. Hn. Sir Lionel
Morgan, W. G.
Whitelaw, William


Higgins, Terence L.
Morrison, Charles (Devizes)
Wills, Sir Gerald (Bridgwater)


Hiley, Joseph
Morrison, John (Salisbury)
Wilson, Geoffrey (Truro)


Hill, J. E. B. (S. Norfolk)
Mott-Radclyffe, Sir Charles
Wise, A. R.


Hirst, Geoffrey
Murton, Oscar
Wood, Rt. Hn. Richard


Hopkins, Alan
Nicholson, Sir Godfrey
Woodhouse, Hn. Christopher


Hornby, Richard
Noble, Rt. Hn. Michael
Woodnutt, Mark


Hornsby-Smith, Rt. Hn. Dame P.
Nugent, Rt. Hn. Sir Richard
Wylie, N. R.


Howe, Geoffrey (Bebington)
Onslow, Cranley
Yates, William (The Wrekin)


Hunt, John (Bromley)
Orr, Capt. L. P. S.



Hutchison, Michael Clark
Osborn, John (Hallam)
TELLERS FOR THE NOES:



Page, John (Harrow, W.)
Mr. MacArthur and Mr. Pym.

Clause 2.—(HYDROCARBON OILS, PETROL. SUBSTITUTES AND POWER METHY LATED SPIRITS.)

7.45 p.m.

Mr. Michael Noble: I beg to move Amendment No. 3, in page 2, line 6, at the end to insert:
on oils for sale otherwise than in Scotland and at the rate of two shillings and ninepence on oils for sale in Scotland".

The Deputy-Chairman (Sir Samuel Storey): We can discuss with this Amendment, Amendments Nos. 4 and 5. Amendment No. 5 is also selected for a Division if required.

Mr. Noble: The purpose that lies behind the Amendment is twofold. First, it has obvious merit particularly for those who happen to live north of the Border, and, secondly, it is designed to test the sincerity of the Government's many

speeches and pledges to help those outlying parts of the United Kingdom and also to help Northern Ireland, as Amendment No. 5 shows.
As will be seen, a good many of my colleagues from Scotland are here tonight, in spite of the fact that we have to fight this particular battle on St. Andrew's night, a night when many Scotsmen find perhaps more attractive things to do elsewhere than in this Chamber.
I have tried to elicit from the Treasury some figures relating to the petrol duty and its effects on Scotland, but without any outstanding success. I was told in a Written Answer last week that no separate figures could be produced showing how much petrol was needed in industry in Scotland, though the figure that I was given for the total duty likely to come from petrol in Scotland under this Clause was about £8 million.
Nor could the Chancellor of the Exchequer give me any breakdown showing the division of petrol and light hydrocarbon oils between industry, private motoring and other purposes in Scotland and England. The United Kingdom breakdown which I was able to get showed that industry probably uses a little over half, private motoring about one-third, and the balance goes for Government and public transport purposes. I suspect that "Government", in this sense includes local government.
I think that there is very little doubt that anybody who knows the position in Scotland, with much greater distances and with comparatively sparse public transport services, knows that any tax of this sort is bound to fall a good deal more hardly on Scotsmen than in places of greater congestion and better public services. In fact, one can see the general picture clearly if one takes the constituency represented by the right hon. Gentleman the Leader of the Liberal Party, who is not in his place at the moment, and looks at the concentration of cars in the Island of Orkney. There, we have a bigger concentration of vehicles per person than in any other part of Europe.
This can be seen in the Highlands and other areas, where there is also an above-average concentration of motor vehicles per person and I think that it demon-states clearly in these areas, not that there is great wealth—I do not think that anybody who knows the Highlands and Orkney and Shetland regards them as places of great wealth—but that the necessity for private transport is very great because there are no alternatives.
I suppose that it will be agreed by both sides of the Committee that the priority at the moment for any Government, in Scottish affairs certainly and in Northern Ireland also, must be to try to get more jobs for our countries. However impatient we have been, I think that there is no doubt that over the last 12 months the position has been steadily improving as unemployment figures, published month by month have shown. So far, the contribution of the Government to the well-being of our country has been to increase Income Tax, to put a large increase on stamps and, by this Clause, to increase greatly the duty on petrol. In addition, last week we had a very steep rise in Bank Rate.
It would be out of order to discuss Income Tax, stamps and Bank Rate when considering this Clause, but I suggest that those things, plus the duty on petrol, which is mentioned in the Clause, have been deliberately chosen as extra taxation the bulk of which falls on industry. It is bound to have a greater effect on our industrial enterprise in Scotland, as most things of this sort have had in the past, than on the rest of the United Kingdom.
There is another important factor when considering the problem of petrol tax related to industry. In discussing with industry the possibility of moving to Scotland from other parts of the United Kingdom, or moving out of the centre of Scotland to other parts of Scotland, that the main reason for refusing to budge has been the extra cost of petrol which would kill the competitive nature of the industry concerned.
Often, in past years, I have discussed this excuse—it is an excuse—with leaders of the industry concerned. It was not always a valid excuse. Often it was offset by cheapness in other respects, certainly not excluding the very special incentives given by the last Government. None the less, this cost of transport has been as an excuse, valid or not, a major deterrent to many industries staying in Scotland. This fear, which has been freely expressed, has now been powerfully reinforced by the direct action of the Government, as it was described in one of the newspapers over the weekend, "with ruthless inefficiency".
Even if one takes the figures which the Treasury was able to give me, this will cost in the region of £8 million to the people of Scotland in a full year. If one assumes, therefore, that somewhere a little above £4 million will come directly from industry, which is inevitable, one sees that it is bound to slow down the expansion and ideas of expansion that a great many industries have because they will not have the money to back up their ideas. In terms of the normal Board of Trade figures for new jobs, one can convert that £4 million or a little over into 3,000 or 4,000 jobs which will be lost to Scotland.
The tourist industry will be very much affected. We have hundreds of miles of wonderful scenery in Scotland and


tourists are coming year by year in increasing numbers. This year it was estimated that the industry brought to Scotland as a whole about £100 million and that about £20 million of that came to the Highlands. There is no doubt that if the Government would accept this Amendment, as I am certain they ought to, it would be a much more powerful incentive to bringing an increased number of tourists to Scotland than any equivalent amount of money they could spend on advertising, however excellently it was devised.
In our basic industries in the countryside, forestry, I suppose, is one of the few still to use a number of horses. They do not require petrol or light hydrocarbon oils. But the Forestry Commission is building new roads through the woods and those roads are designed so that the timber can come out by lorry and tractor. Once the timber is out of the forests there is a very considerable haulage charge when it is going to sawmills, or, as a great deal will now go, to the pulp mill which is being built at Fort William. Forestry also will suffer an extra cost, although a great deal of it will fall directly on the Government because of the operations of the Forestry Commission.
Petrol and diesel oil is used on farms. Without any doubt there is a much greater quantity of petrol and diesel oil used in transporting animals from the farm to the market in Scotland than in other parts of the United Kingdom, again because of the very considerable distances which have to be travelled. I do not speak of the extra cost to local authorities and Government Departments. I am sure that some of my hon. Friends will say something about that. It must be well known and must have been estimated by the Government when they took the decision to put this extra cost on to petrol.
There is another major priority after the priority of getting jobs to Scotland. It falls into two sections. The first is the cost of living in rural areas. That is very closely linked with the second, which is the depopulation of those areas. That has been the subject of criticism both by my hon. Friends and often by hon. Members on the Government side. I think it absolutely apparent that there are certain things in the cost of living in rural areas which will be most directly affected

by this extra cost of petrol. In most of our areas there are very few, if any, buses. All food is delivered to the houses and cottages by vans. Practically all the goods leave by lorries. Probably the salvation of the rural areas has been the very large increase in the number of private cars.
There is a curious paradox that, on the whole, people will stay in these areas if they have a means of getting away from them. If workpeople can be provided with small garages and perhaps a little help to subsidise the buying of a cheap secondhand car and they can get to the nearest town, perhaps once or twice a month, to do their shopping, meet their friends and go to the cinema, a football match or whatever they fancy, they will often stay quite happily in a rural area. Apart from this there are few things in the rural areas today which make them cheaper to live in than towns.
8.0 p.m.
In the old days housing was much cheaper in the rural areas than in the cities and towns, but that is not so today. I am sure that if he looks at council house rents in Argyllshire, Dumfries and elsewhere the Secretary of State will see that rents there are higher than for council houses in Glasgow and other cities. This advantage is no longer available to people living in rural areas.
During the last week or so we have had an opportunity of discussing in the House the question of giving pensioners living in big cities the means of getting cheap bus fares during off-peak hours so that they could do their various ploys, whether for business or pleasure, about the town. There are no such provisions in the country. It is difficult to see how there could be. In the country, the opportunity for elderly people to get about is in 90 per cent. of the cases provided by a neighbour "giving them a hurl." Taxis are very expensive.
In the country an extraordinary amount of self-help has been built up. It is of great value to old people. For these reasons, a cheap second-hand car and the ability to move around in it has been of much benefit in a rural area. I would not say that this is to be spoiled or ruined, but it will be put into considerable jeopardy by the extra cost of petrol because such cars are not owned


by people who have a great deal of money.
In my part of Scotland, to go to a cinema probably involves a return journey of 100 miles and a considerable amount of petrol is used for quite ordinary business. This is true of the mainland, but how much worse off are people who live on the islands? I have never had the opportunity of buying any petrol in the constituency of the hon. Member for Western Isles (Mr. Malcolm MacMillan). Hospitality in that constituency is so great that one is always motored around and not allowed to pay for petrol. In my constituency petrol on the Isle of Islay costs 6d. more than it costs on the mainland. On other islands the extra cost varies; sometimes it is 4d., sometimes 3d., sometimes 6d. People living on the islands are already penalised above the level of those on the mainland and they do not have a particularly good road system or anything very special for the money they have to spend.
I know very well—perhaps I should say that I suspect very much—that the Chief Secretary will tell us with a great deal of certainty that it would be impossible to have different prices for petrol in different parts of the United Kingdom. He may say that there would be the problem of the boundary line and that people would cross the line to get a fill-up of petrol more cheaply perhaps for only a few miles of motoring.
This is, of course, I admit, an administrative difficulty but in the past it has been got over in one form or another. I remember when we were subjected to having pink and white petrol. There were pumps where one could buy one or the other. In areas one could buy only the pink because the distances were too great for white petrol. This was not a problem of price, but of coupons.
It is also true—and I think that the Chief Secretary will admit this—that, for a great many years, the petrol companies themselves have operated deliberately regional variations in petrol prices according to distances from their depots. I do not say that it represents a jump of as much as 6d. per gallon from one point to another, but there are different prices and petrol gets steadily more expensive as one

goes away from the main centres of distribution.
If that is possible, I cannot believe that it is beyond the powers of the Chancellor, of the Secretary of State, of the Chief Secretary and others to work out a system by which petrol, instead of getting more expensive the further one goes from the distribution centres, gets cheaper, and if the Government promise to introduce something of this sort we will not insist on their sticking to the exact amount of 6d. at any one place.
I would also ask the Chief Secretary particularly to consider the case about the islands, because it is difficult, and it is becoming increasingly difficult, to keep young people in the islands. This is certainly very largely due to the extra cost of living and, indeed, to many other things as well. If the Chief Secretary goes to the islands—I hope that he may from time to time, for they are delightful places—he will find that probably the most universally condemned practice there is the practice of adding to the normal cost on the mainland. Whether that is fair or not, I do not know. Of course, distances are great and the cost of distribution of food in the islands is heavy. The hon. Gentleman would give a great deal of real pleasure to the people living in these islands if he could consider this problem.
Every Conservative and Unionist Member from Scotland has signed this Amendment, because in these 40 days of office not one single thing has yet been done by the Government to help Scotland's problem. But a great deal has been done to hamper Scotland. It may well be that the Secretary of State should have our sympathy. I am certain that my right hon. and hon. Friends would not mind giving him some sympathy, although we very seldom got any from him.
I know very well that he has a considerable problem in persuading his colleagues that what Scotland needs at the moment is special treatment and not just to be treated as a level part of the United Kingdom. This proposal by the Government is not simply one of equal misery nor one which is very popular among hon. Members opposite. It is a measure of special misery for Northern Ireland and Scotland and areas in England and Wales where similar problems of distance apply. I hope that the Government will accept


the Amendment, if not in the terms stated then at least in the spirit of petrol and of St. Andrew's day.

Mr. Malcolm MacMillan: I shall not put a case against the speech of the right hon. Member for Argyll (Mr. Noble). He made an excellent argument in 90 per cent. of it; but I have often heard him put the case against that speech when he was Secretary of State. I shall say nothing to the contrary of the spirit of his speech but never was the proverb so apt that
The devil was sick, the devil a monk wou'd be;
The Devil was well, and the devil a monk he'd be.
It is becoming almost a clichè now, hut the right hon. Gentleman's Government had 13 years of mounting majorities and, one would have thought, complete responsibility to do something about the very things he now blames on the present Government in the middle of the mess which he and his right hon. Friends left behind. He blames my right hon. Friends for not being able to put this right after 13 years' delay. The right hon. Gentleman cannot get away with that sort of thing. He is playing politics.

Mr. Noble: I would not deny that this is playing politics, but the hon. Member is playing politics rather more freely because the last Government, particularly in the final two or three years, took several actions giving special fiscal attention to Scotland. That is what his party said they would do and I am encouraging the Government to live up to their word.

Mr. MacMillan: I am glad that the right hon. Gentleman is encouraging them, even if it is a political post mortem. It is always good to know that we will have his support in any measures we take to help the Highlands and Scotland. At first sight, we find it difficult to support this Measure. My right hon. Friend the Chancellor of the Exchequer found it difficult to put forward. But it will confer benefit on a larger number of people than those in the Highlands and Islands the right hon. Gentleman mentioned. The proposal is directed at a very special purpose and will confer much benefit on a very large number of people, not only in the country as a whole but in the areas we represent.
I remember the right hon. Gentleman's advice not long after he took office. It was not that the Government and the nation should bestir themselves and give high priority to Highland development, but that the Highlands must wait until other areas were developed, and then he could give them his attention.

Mr. Noble: Mr. Noble indicated dissent.

Mr. MacMillan: The right hon. Gentleman shakes his head. Perhaps it is his memory that is at fault. I would attribute it to his memory and not to his intelligence. When he was at the zenith of his achievement—I am sure that it was that—he said that the Highlands must wait and have patience. He said that the Government must deal first with industrial areas. Yet he knew that the problems of the north of Scotland were very much more urgent in many respects and in special respects. Indeed, he now asks that they should receive special treatment.
He divided the problems up and spoke of pink and white petrol, which was the product of war-time conditions. He should also recall the exorbitant price of petrol which was the product of the Conservative Government's folly at Suez. One is not supposed to talk of Suez but one is bound to come back to it when thinking of petrol for the Highlands and Islands. At no time did petrol cost more than when the nation was represented by the right hon. Gentleman and his friends at the time of Suez.
I do not remember any right hon. and hon. Members opposite raising their voices in protest against the effect of that on the Highlands and Islands. I did not hear them criticising their Government for the action which resulted in that situation. Petrol increased in price then by much more than it will under this legislation. No one wants this increase. The Government certainly do not. Indeed, the right hon. Gentleman does not suggest that the Government are doing it out of ill intent. He himself accepts it but does not want it to apply so heavily in Scotland. If this Amendment falls, then he has another to prevent the increase falling on the Highlands.
But one cannot just divide Scotland from England nor the Highlands from the rest of Scotland. It is not so simple.


The right hon. Gentleman mentioned Orkney. There is no comparison between conditions there and conditions in parts of Shetland and the Western Isles, where there are so many different problems. He could have mentioned, however, that in the Isle of Lewis we have much the same situation as in Orkney.
8.15 p.m.
In Lewis we have a large number of vehicles of all kinds. I agree that it is not through opulence but through necessity. Many people would have preferred the village bus if it had continued to operate. The right hon. Gentleman is answerable for that as well. This is, after all, one of the biggest problems of transport both in his constituency and mine and, to a large extent, throughout the rural areas.
The right hon. Gentleman had before him for a very long time two reports of committees set up by his Government—the Jack Committee and the Kilbrandon Committee. What action did he take to implement a single recommendation of either committee in order to help solve the problem of Highland transport? He took none. Now he is worried about the effects of increased fuel costs upon building in the Highlands and Islands. But it was not because of oil and petrol that, ineptly, a few weeks before the election, he drastically cut the school building programme in the Highland counties.
The right hon. Gentleman talked of house building costs and, of course, these have gone up. But they have gone up not because of petrol costs—although, of course, they are affected by everything—but because of his Government's policy in making it dearer and dearer for local authorities to borrow in order to build. It is as simple as that. The Highland local authorities will say that to bring this into the argument about petrol tax is not sensible. What is the right hon. Gentleman to get out of this? He had opportunity as well as responsibility and he very largely threw those opportunities away.
I do not dispute that any increase in petrol tax will hit the Highland areas and Scotland generally. Even the degree with which the impact is felt may vary between parts of the Highlands and the Lowlands of Scotland more than between the Indus-

trial Lowlands of Scotland and parts of industrial England. It is extremely difficult to zone these things and to have demarcation lines and so on. I know that there was zoning of petrol, but that was a distribution arrangement of the petrol companies and was not related to taxation.
I supported most of the right hon. Gentleman's speech, but I was sorry that he did not say that this increase will affect areas like Barra and North Uist, unless they are cushioned against it, areas which year after year have been unable to get the supply of electricity from the North of Scotland Hydro-Electric Board. We got no help from the right hon. Gentleman about that. The Board wanted to give it, but he prevented it. It is not because of the cost of petrol that several islands are without electricity. Every year that went by, capital costs mounted and the right hon. Gentleman made it almost impossible for himself to go to the Treasury and justify these things because of the piled up expenditure which had come from all his delays and so-called economies. The Hydro-Electric Board uses diesel oil in the Highland areas and will be affected by these increases, but the right hon. Gentleman himself made little contribution in that direction when he had responsibility.
The right hon. Gentleman said that there were many things to fight for—more houses, more roads, more schools and cheaper transport—but when he was in office he had nobody to fight for these things. We were not fighting him, but urging him on and inviting him to do these things more quickly and to show more signs of progress. He had every opportunity and all the power and support he wanted and no opposition. If that is not failing, I do not know what he would measure to be a failing.
In these islands, about which his bowels of compassion are now melting, the right hon. Gentleman has seen the price of bread go up to nearly 1s. 6d. The price of milk in areas which do not have their own independent supplies is to go up to 1s.—an increase proposed before the election, I should say, in case it is attributed to us—and he knows that these are absolute necessities not only for old-age pensioners, but for everybody in these areas. He has seen prices going up and up, the price of tea doubling and


almost trebling and the price of every other necessity increasing almost year after year. Only now, relieved of opportunity and office, does he come along to criticise other people for not having done in 40 days what he failed to do in 13 years, not to mention the centuries before that. The right hon. Gentleman now has the impudence to be censorious at this stage.
The right hon. Gentleman was perfectly right to refer to depopulation. Of course I know that this increase will be difficult for any area and that any such difficulty will hasten depopulation. There is nothing in my experience as a Hebridean, born in the Western Isles and living there in my boyhood, nothing which has stuck in my memory so poignantly, as the sight and sound of the things done when the migrant ships were taking people away by the hundreds in the middle twenties of this century after a hundred years of Tories and Liberals. The depopulation went on throughout that time, and it began again in 1951.
By 1950, for the first time for nearly 100 years, there was a halt—perhaps only temporary, but we hoped continuing—in the drift from the islands and for the first time the figures were reasonably static. We hoped that, with a continuance of the policies which brought that about, Highland depopulation might have been halted for all time and the tide swung in the other direction. However, within 18 months depopulation had started again and thousands upon thousands of people had to leave the area through the years of the Tories' affluent society, through the years of the benevolent policies which the right hon. Gentleman did not pursue when he was in office. When it comes to depopulation, no Highland laird and no Tory ex-Secretary of State should open his mouth but in a confessional sense and with a sense of shame.
Like the right hon. Gentleman and many others, I want to see something done about the Jack Report and the Kilbrandon Report and something done to assist the bus services in the Highlands and Islands and other rural areas throughout Scotland, and England and Wales. It is perfectly true that any increase in the cost of fuel is bound to make the problem more difficult, but I hope that this will be only a temporary measure, or that some special relief is

to be accorded to make the problem easier and not more difficult. I am perfectly well aware of the overwhelming considerations which compelled my right hon. Friends to take the measures now being criticised. If it were not for the purpose at which they are aimed, I myself would be much more critical than I am.
I agree with 90 per cent. of the right hon. Gentleman's speech, but he knows perfectly well that the benefits will flow in greater measure, in relation to population, to the Western Isles and Orkney and Shetland and the Highlands than any other region of Great Britain, because relatively we have an older population and more people dependent on unemployment benefit, thanks to himself and his hon. Friends, more people on National Assistance and other social service benefits, than almost any other part of the country. The right hon. Gentleman must know that in the Western Isles alone we have nearly 4,000 people receiving only National Assistance or whose income or benefits have to be supplemented by it. I do not think that he is happy about that, but he is now free of responsibility for it and I can understand that he is happy about that.
These benefits have to be paid for. The people of the Highlands will certainly be critical of any increase in Income Tax, or in the tax on petrol, hydro-carbon oils and so on. But they will have the intelligence to appreciate that the cost of these benefits has to be paid. It will be highly irresponsible for the right hon. Gentleman and his hon. Friends, especially with their record, to vote against providing the means to give benefits which will greatly raise the standard of living of people in an area where it is low enough generally, but where for the old and the unemployed it is even lower. I think that the hon. Member for Perth and East Perthshire (Mr. MacArthur) is uncomfortable in his seat.

Mr. MacArthur: I was only waiting in the hope of following the hon. Gentleman, because he has made a number of remarks which require answering.

Mr. MacMillan: He seemed to be so uncomfortable that I thought that I would put him out of his misery. I hope that the hon. Gentleman is to follow me, for that will give me more confidence in presenting my arguments now. I am almost exactly at the end of my speech.
The right hon. Gentleman has forgotten one or two small things. In our 40 days, as against the 13 years of Tory rule, we are at least firmly committed to the setting up of a Highland Development Board. The Liberal Party can join us in congratulating ourselves on that.

8.30 p.m.

The Temporary Chairman (Mr. James McInnes): I find great difficulty in relating anything that the hon. Gentleman is saying about the Highland Development Board, unemployment or housing to the Amendment.

Mr. MacMillan: Thank you, Mr. McInnes. I appreciate your difficulty, but if you had allowed me to continue I should have been able to relate my argument to the Amendment.
I am hoping—indeed we are committed to this—that one of the priorities in the responsibilities laid on the Highland Development Board will be a review of transport in the Highlands and Islands and that it will be given the task of producing an integrated, co-ordinated transport service by sea, land, rail and air. This has been ignored by the right hon. Gentleman and his hon. Friends. We have not completely forgotten the Beeching Report. Suppose that lines had been whipped away under the Beeching Report. The problem facing us tonight would have been infinitely greater. The already inadequate roads would have been further overburdened with oil-burning and petrol-burning vehicles of all kinds. We have talked about congestion. Imagine the congestion which would have resulted if the railway system in the Highlands were demolished and everything were thrown on the 10 per cent. of roads in the condition in which the right hon. Gentleman and his hon. Friends left them while they were developing the industrial South first.
That is the only reference which I propose to make to the Highland Development Board at this moment. Transport will be one of its priority tasks and, I hope, one of its most successful. Transport is a matter to which it will have to address itself from scratch. So little appears to have been done in the way of serious study into the co-ordination of Highland transport that it will take up

a lot of the Board's time—perhaps more time than it should. We will have the legislation in the near future, and I hope that it will be passed with the help of the right hon. Gentleman and his friends.
I agree with what the right hon. Member said about the importance of tourism in the Highlands.

Mr. George Y. Mackie: Is not the hon. Gentleman adopting exactly the same attitude that the right hon. Member for Argyll (Mr. Noble) adopted for so many years? Is he not in fact excusing the actions of a largely English Government for English conditions because he is a member of the Labour Party, and is he not putting the same arguments as the right hon. Member for Argyll put for so many years?.

Mr. MacMillan: The hon. Gentleman forgets that the Labour Party has a very large majority in Scotland—and that goes for Wales. The failure lies with the English in not electing a majority of Labour Members. But that is another point. The hon. Member must be content in the knowledge that even if we had a Scottish Parliament it would have a vast Labour majority. We will argue that point later.
I agree that tourism is a valuable industry, and the Highlands have a valuable share in it. Here, too, we have pressed for years and have offered all sorts of constructive suggestions with little effect for improving conditions for the reception of tourists, the roads over which the tourists travel and all the other things essential basically to the development of the tourist industry. To a large extent, the increase in tourism in the Highlands is fortuitous. People who went to Scotland took in the Highlands in their visit, just as some people—Americans and Canadians in particular—take in London in a European package tour. Had the right hon. Gentleman and his hon. Friends properly used the years which the Tory locusts instead have eaten, I am sure that the tourist industry would have developed at an even greater rate and that many of his own complaints today would have been behind him.
To say that after only 40 days the Government have done nothing in this matter is an absurd comment to make. While it is eminently flattering, it is unrealistic. But at least there has been a


full adumbration of the legislative programme proposed for Scotland for the first year, including the Highland Development Board. [Interruption.] I am not excusing the Government. The right hon. Gentleman cannot know my political and Parliamentary past, or he would not have made that comment. He is only just starting in opposition. I had it 30 years ago. I am sure that in every speech that he makes over the next 10 years—

The Temporary Chairman: I must ask the hon. Gentleman to confine himself strictly to the Amendment.

Mr. MacMillan: I am sorry, Mr. McInnes, if you regard the right hon. Gentleman as an irrelevance in the Committee, but there it is.
We are 90 per cent. with the right hon. Gentleman in his advocacy on the technical question of how far one can zone taxation in the same way as one zones pink and white petrol. This is a matter which involves all sorts of highly technical and difficult problems. I agree with him that one can legislate for areas. Whether one can do that within the ambit of a tax of this sort is rather another matter. That I am not at all sure about, and no one has either proved or disproved this argument. It would be interesting to hear what my right hon. Friend the Chancellor has to say on this.
I do feel, however, that the one thing which my right hon. Friends the Secretary of State for Scotland, the Minister of Transport, who still has a responsibility in this matter, and the Chancellor should address themselves to is the whole question of the rural bus. I am talking now of the recommendations of the Jack Committee's Report and the Kilbrandon Committee's Report. These have been unforgivably neglected. Samples taken in different areas are scarcely needed at this time of day. We can get all the evidence from responsible people, motorists, pedestrians, bus companies, all over the Highlands and Islands. If these two Reports had been implemented, if they were implemented now, that would greatly mitigate the impact of the greatly increased costs in respect of petrol, though I must say that had they sufficient bus services the people in the Western Isles would never consider running cars through the villages.
I largely agree with so much that the right hon. Gentleman said, but I must say that it would have come better, with more dignity, and also more convincingly, from somebody else.

Sir W. Anstruther-Gray: I can at least agree with the hon. Member for the Western Isles (Mr. Malcolm MacMillan) that the increase in the petrol tax makes the problems of Scotland more difficult. Apart from that, I approach this Amendment not from the point of view of the Highlands and Islands, as he does, but from the point of view of Berwick and East Lothian, and I should like to follow the line which my right hon. Friend the Member for Argyll (Mr. Noble) took in moving the Amendment—as he did with great competence, if I may say so—and, first, in emphasising the blow which it is to industry in Scotland.
The estimate of £8 million of total cost, if it is correct, means more than £4 million will have to be found by industry in Scotland, and that may well amount to 3,000 or 4,000 jobs being lost. My right hon. Friend mentioned the tourist industry, he mentioned forestry, and he mentioned agriculture. I myself received a reply to a Question stating that the increased tax would add £200,000 to the annual cost of Scottish agriculture.
I should like now to come from those general considerations to the personal considerations of my constituents, because it is very clear that they personally will be hit by this tax and hit more severely than people in other parts of the United Kingdom. Certainly, the rural areas of Scotland will suffer a great deal from this 6d. increase. The will feel it more than town dwellers who can get good bus services—and if one comes to London one can get a very good underground service, too, where the petrol tax does not apply.
In my constituency, Berwickshire, to take one of the counties, the number of motor cars is such that—with the possible exception of the Isles of Orkney—it has, I think, as high a ratio as that anywhere else in the country. The ratio is one car to every five persons, as compared with the United Kingdom average of one to seven. Many of my constituents have to use their cars to get to work, to take their children to school, and to get to the local town shops. It does not stop


at that, but the things which they want to buy in the town have to be brought to the shops by road, by vehicles using fuel which will bear this tax. At every point this will raise the cost of living.

Mr. John Rankin: Can the right hon. Gentleman tell me whether there is any public transport in his constituency?

Sir W. Anstruther-Gray: Yes, I can. In many cases public transport is woefully deficient. I am not happy on the political issue, particularly on the subject of Dr. Beeching and trains, but I see that the Secretary of State for Scotland is present, and although I am aware that it comes under his right hon. Friend the Minister of Transport perhaps more than under himself, I should like to leave it in his mind that, politics apart, I would be more than grateful to him and to the Government if they could make sure that East Linton Station, which I have sought to keep open, is kept open in spite of what has been decided in days gone by against the wishes of the local Member. I am giving the Secretary of State for Scotland and his colleagues a chance of doing better, and we will see whether they do.
There are also buses, but the bus services in these sparsely populated areas are inadequate. The hon. Member for Glasgow, Govan (Mr. Rankin) has a good deal of experience of Scotland, and he must be aware that although there may be a service once a week, or something like that, the general daily service that is required by people in the outlying parts of Berwickshire and East Lothian finds a great necessity in the private motor car, and I am protesting that this tax will hit them much more severely than it will hit other people in the country.
I should like now to ask a question which perhaps the Minister in charge of the Bill can answer. In a rather depopulated area it is found necessary for some of the mills in my constituency to draw upon a wide area to bring their labour to the spot because there is not enough local labour near at hand. Those mills make a practice of organising a private bus service which collects people from their homes in the morning and takes them back in the evening. Will such buses be allowed to take advantage

of the rebate which I understand is proposed for other bus services? I hope that the Minister will be able to give us a satisfactory and encouraging reply.
In making my speech I am thinking of my constituency, just as the hon. Member for the Western Isles was thinking of his. I do not want to suggest that it is only the outlying rural areas which are to be hit by this tax. In parts of East Lothian I have a very acceptable dormitory area for people working in Edinburgh. It is entirely to the good of their health that they should come out and spend the night in East Lothian, and all depends on being able to get back to Edinburgh for their work the following day. All these people will be hit by this distressing tax, and we do not stop at that.
In the whole of East Lothian there is not a pit left working since the National Coal Board took charge, and yet many miners live within the constituency. They now have to travel outwith it to pits some distance away. This, again, will be a cost in petrol to be borne either by themselves, or in the cost of production, and however this cost is borne it will tend to raise the cost of living.
If there was one thing that we could all agree about in present-day Britain I would have thought it was that we wanted to stabilise the cost of living. Earlier today we have been talking about taxation and pensions, but surely the stabilisation of the cost of living should rank very high in the eyes of the Treasury Minister. Here he is imposing a 6d. tax which, at every turn, can have no other effect than to increase the cost of living. I beg him to desist, at least in relation to Scotland.

8.45 p.m.

Mr. Rankin: It may be that I formed a wrong impression of the speech of the right hon. Member for Berwick and East Lothian (Sir W. Anstruther-Gray) when he began. I felt that everyone in his division must move about everywhere in motor cars. That was why I rose to intervene and ask him whether there was any public transport in Berwick. He admitted that such a facility exists.
None of my hon. Friends would deny that the tax is bound to have some effect upon industry, agriculture and the movement of people who use either private cars or public transport. But we are told


by the Government—and I am sure that no hon. Member opposite disputes the statement—that they are going to attempt to ensure that the impact of the tax on public travel is greatly modified. If that is the case, the right hon. Member for Berwick and East Lothian has grossly inflated all the difficulties which will befall his constituents.
I do not blame him for putting his case in the terms in which he put it, because we know that all hon. Members are interested in their majorities when they face their electors. The right hon. Gentleman got a very great fright at the last election. I believe that he is now seizing this opportunity to improve his stock when the next appeal to the electors comes along.
As I have listened to hon. Members telling us what the effect of this 6d. will be on this person and the next person I have wondered exactly how many people will really pay the 6d. when it comes to the bit. What sections of the community will have to pay it out of their own pockets? What sections will not be able to pass it on? The right hon. Gentleman instanced a whole lot of people who will pass the tax on to someone else. Hon. Members on both sides of the Committee could name those sections which will not be able to pass it on. They are the people who have the real cause for complaint. The rest will simply slide it on to other backs.
The logic of the argument of hon. Members opposite in opposing this tax is that they are prepared to make the old-age pensioners, the sick and the injured suffer. [HON. MEMBERS: "Rubbish."] Of course they will make them suffer, for the simple reason that if hon. Gentlemen who have been speaking had been in the Chamber earlier they would have heard the Chancellor say that one reason for the imposition of 6d. on the petrol tax was to ensure the increase in pensions for the old, the sick and the injured. My right hon. Friend has to get the money from somewhere, and that is one source.

Mr. Noble: I listened to almost the whole of the last debate and nearly every hon. Member opposite who took part in it said that the whole of the increase in Income Tax would be used for pensions. We now hear that the whole of the proceeds of the increased tax on petrol will go to paying for old-age pensions. I have

no doubt that we shall hear the same thing about the surcharge, and so on. I wish that hon. Members opposite would make up their minds what the money is to be used for.

Mr. Rankin: It is no use the right hon. Member for Argyll (Mr. Noble) trying to make a point out of that. He knows perfectly well if the Government have to pay out money they must get in money. The petrol tax is one way to get it and Income Tax is another. I say that those who resist the increase in the tax are prepared to penalise the old people, the sick and the injured for some particularly selfish purpose of their own. I wish to return to—

Mr. George Y. Mackie: How can the hon. Member say, on the one hand, that this tax will be passed on to the poorer sections of the community, which is what he said a moment ago, and, on the other, say that most of the tax is for pensions?

Mr. Rankin: I did not say anything of the kind. The hon. Gentleman has not been listening—

Mr. Mackie: I have been listening incessantly.

Mr. Rankin: —with sufficient care. I said that the tax, for the most part, would not, as was said by the right hon. Member for Berwick and East Lothian be paid by industrialists and agriculturalists, it would be passed to other sections of the community. Those were the exact words I used, and if the hon. Member for Caithness and Sutherland is going to interrupt, he must show at least that he has been listening to what was said.
I turn now to the former Secretary of State for Scotland, the right hon. Member for Argyll, who shows an unusual interest in the welfare of Scotland. I wish that the right hon. Gentleman had been as lively in defending the interests of Scotland when he had the power to do something as he is now that the power has gone from him. I wonder whether the right hon. Gentleman visualises what would happen if the proposed increase of 6d. was removed. Suppose the Minister said that he would take off the 6d. as is asked in the Amendment. Where should we go? [HON. MEMBERS: "Scotland."] We should go back to the 2s. 9d. tax and to the status quo.
In the Highlands of Scotland and in Scotland generally we should go back to Inverness, with a falling population; we should go back to Argyll, with a falling population; we should return to Sutherlandshire with a falling population—to the Western Isles, with a falling population. We should go back to the situation under Toryism, a situation which hon. Members opposite had in their hands to cure, or help to cure, for 13 years; and at the end of that time the only county in Scotland which showed an improvement in population was the County of Caithness. That is the record which the hon. Gentleman wants us—

The Temporary Chairman: Order. We are not dealing with the record of anyone. We are dealing with the Amendments on the Notice Paper.

Mr. Rankin: I tried to visualise what would happen if the Amendment which has been moved by the right hon. Member for Argyll were accepted by my right hon. Friend. Surely that is quite a pertinent part of the argument—what would happen if this were accepted. We would go back to a status quo which I merely tried to picture, a status quo of falling population in the counties in the Highlands—with one exception, where a different step was taken. Nothing was done.

Mr. Russell Johnston: rose—

Mr. Rankin: Just a second.
So far as observable factors were concerned, nothing was done in any other part of the Highlands of Scotland.

Mr. Johnston: I agree with the hon. Gentleman, but is he arguing that Invernesshire, Caithness, and so on, will benefit from the increase in the cost of petrol?

Mr. Rankin: We will leave that to the next part of my argument. [Laughter.] Yes—I am not finished. I am merely seeking to visualise what would happen if the 6d. came off. We go back to a status quo of declining industry and falling population in the Highlands, with one exception, and we will go back to a policy which is designed to withdraw more and more people from the Highlands by the creation of this great central plan of development in the centre of Scotland. It is bound to act as an attract-

tion to the population of the Highlands, just as Glasgow, when it was a growth centre in Scotland, drew people from every part of the Highlands into the city. My own constituency to this day shows a bigger Highland population than many parts of the Highlands themselves.
These are the things that would happen if the right hon. Gentleman gets his way. If he does not get his way, and the tax remains, then, in my view, it will do very little in the way of inconveniencing the Highlands of Scotland. The impact of this 6d. tax will do little to disturb the Highlands as they are at present. That is my view of the tax. When the right hon. Member talks about the Highlands, I wonder what he means by "the Highlands". Does he stop at the seven crofter counties? Does he leave out of his plan the Island of Arran and the Island of Bute?
Does he not know that the Island of Arran is not so far south as part of his own division of Argyll, which is part of the Highlands? The Island of Arran is further north than the Campbeltown end of Kintyre of his own division, yet it is not regarded as part of the crofter counties; nor is Bute; and yet Arran suffers from all the economic disabilities that Argyll suffers from—the cost in transport of petrol. The fact is that in Arran people will have to pay not only the 6d., but also the additional cost of transport, and all that is additional to the price of petrol. So that if there is a disability in this, why does the right hon. Member leave out the Island of Arran and the Island of Bute? Does he limit the crofter counties to those he knows? Does he cut out those counties which live by crofting to a very large extent simply because they do not come within the mystical seven?
I have covered most of the points on which the right hon. Member provoked me. I was also provoked by the hon. and gallant Member for Berwick and East Lothian and one or two sympathetic interrupters in the halfway party. I believe that when the decision is taken some hon. Members opposite will either support the Government or will abstain on this decision to impose the tax. This is a decision taken not because we love taxes, but because at this particular time this increase is necessary. There is nothing permanent in it. In my view,


it is a temporary tax. [HON. MEMBERS: Oh."] I am sure that my right hon. Friend will have a word to say about that, but, in my view, it is a temporary tax and in that mind I support it.

9.0 p.m.

Captain L. P. S. Orr: My right hon. Friend the Member for Argyll (Mr. Noble) made a cogent speech when he moved the Scottish Amendment. It was an excellent speech, well argued, and I agreed with every word of it. If he had substituted "Northern Ireland" for "Scotland" throughout, I should have been even more filled with enthusiasm.
All hon. Members who have spoken, including two hon. Members opposite, made a cogent case for accepting all these Amendments. The hon. Member for the Western Isles (Mr. Malcolm MacMillan), whose approach was a shade oblique and historical, arrived in his heart at the fact, that, if carried, the Scottish Amendment would be a good thing for his constituency. Whether he supports that view in the Lobby remains to be seen.

Mr. Malcolm MacMillan: I said that it would be a good thing for some and bad for others, and that those who were in most need ought to have consideration in anything which we did.

Captain Orr: I thought that was what the hon. Member said, and I gather that he included his constituents in those who should have consideration and that he would therefore probably support us in the Lobby.
The hon. Member for Glasgow, Govan (Mr. Rankin) asked what would happen if the Scottish Amendment were carried. The answer is that his constituents would have the best St. Andrew's Day they had had for a long time. If he voted for us they would cheer him to the echo.

Mr. Malcolm MacMillan: Too late.

Captain Orr: The third Amendment exempts Northern Ireland from the rise in the tax. Hon. Members opposite seemed to suggest that there might be some administrative difficulties about the Border in dealing with Scotland, but in Northern Ireland we are dealing with an entity which has a very clearly defined administrative boundary and which probably would not present the difficulties

which hon. Members opposite envisage for Scotland.
During the General Election the Northern Ireland Labour Party produced a document called "Signposts for the New Ulster", which I have no doubt hon. Members opposite have studied. There are three statements in it with which I profoundly agree—probably the only ones with which I agree. They say, for example:
For years Northern Ireland has suffered higher unemployment and lower average earnings than the rest of the United Kingdom.
They then say:
The prosperity or decline of Ulster depends on decisions on fundamental economic and financial policies taken in London.
They add:
Northern Ireland exports some 80 per cent. of her products; for many of these raw materials have to be imported from Britain and elsewhere. Freight services, both by sea and air, and their charges, are extremely important.
I agree with all those things. The difficulty is that in the Labour Party document the whole emphasis and implication was that once a Labour Government were at Westminster, Northern Ireland would get even better special treatment.
Indeed, in the letter of the present Prime Minister to Northern Ireland candidates at the election he said just that. I do not remember his precise words, but they were something very like that—that we could look forward to better, special treatment. One of the purposes of tabling the Amendment is to discover what this special treatment is to be.

Mr. R. Chichester-Clark: My hon. and gallant Friend, with his usual relevance, quoted from a document issued by the Northern Ireland Labour Party. Ulster farmers have been hard hit by the petrol tax. As it might affect our attitude to the Amendment, can my hon. and gallant Friend say what the document said about agriculture?

Captain Orr: It says nothing about agriculture. This was one of the things I noted during the election. However, if I were to examine the document in all its aspects I would, no doubt, be ruled out of order.
As I was saying, one of the purposes of the Amendment is to inquire just what are the special arrangements Northern Ireland will have, because they are relevant to the effect of the petrol tax. To


understand the background of the effect of this on Northern Ireland one must realise two things which are essential for growth in Northern Ireland and for dealing with our economic problems and attracting new industries. They are, first, a steady and rising level of investment, and, secondly, the ability for industry to cut its costs to the minimum.
We have in Northern Ireland our natural disadvantages. There is an absence of indigenous sources of power and raw materials and, to offset that, the costs of our industries must be pared to the very bone. The present policies of the Government since they came to power—and I say this in no party political spirit—the 15 per cent, surcharge which we will be discussing later, the raising of the Bank Rate to 7 per cent., together with the uncertainty about the capital gains tax and the proposed corporation tax have the effect in Northern Ireland—and this is all I will say about them—of making further investment there difficult. They will have the effect in the end of producing a gap in industrial development. At present, there are industries in the pipeline. They will come along. But the time will come when, if the present policies are continued, the effects will be felt in Northern Ireland.
It is essential that nothing is done to increase our costs, but the petrol tax is one case in which the costs of industry in Northern Ireland are bound to be affected. We want to know from the Government if they accept the argument that costs to industry in Northern Ireland will rise. If so, will they accept the Amendment? If not, what do they propose to offset the rising costs to help us and to keep the pledges they made during the election?
The Amendment does not deal with the most serious aspect of the rise in the petrol duty. That is the cost of cross-channel freight and the costs within Great Britain of getting raw material to Northern Ireland and exporting our products from Northern Ireland. It is impossible to devise an Amendment which would safeguard the interests of Northern Ireland and at the same time not destroy the whole concept of the duty over the rest of the United Kingdom.
We have voted against the duty itself. We voted against the Budget Resolutions and we shall undoubtedly vote against this Clause in due course. But suppose the petrol duty is retained for the whole of the United Kingdom. How do we safeguard the situation in Ulster? I think I am right in saying that the Chancellor of the Exchequer has argued that the petrol duty is deflationary. He went out of his way to say that the measures in this Budget were deflationary. I hope he recognises that while deflation may be admirable in the present circumstances for the economy of the United Kingdom, it is certainly not admirable for the economy of Northern Ireland. The very last thing we want there is deflation.

Mr. MacArthur: And in Scotland.

Captain Orr: And in Scotland, but certainly Northern Ireland in particular is the one part of the country where deflation is not wanted.
We want to know what the Government are going to do. We have made an estimate—I understand this is approximately right—that so far as the internal costs in Ulster are concerned, the Treasury expects to get in one year revenue amounting to £2·3 million from the extra duty in Northern Ireland. We do not know whether or not the Government, or the Northern Ireland Government on their behalf, have made any estimate at all of the breakdown of this £2·3 million—how much of it is supposed to be drawn from private and pleasure motoring, and how much from industry, production and distribution as a whole. We should like to have the breakdown if the Minister could give it to us. Perhaps he will be able to get it for me later on.
We have had one figure from the Ministry of Agriculture. We understand that the extra cost to the farming community will be of the order of £200,000 in one year. I think that when one looks around Northern Ireland and observes the uses of petrol, one comes to the conclusion that that is a considerable underestimate, but perhaps the Minister will say more about it later.
Even if one concedes that the man who uses his motor car purely for pleasure and private purposes should bear his share


of the burden that falls on the motorist in other parts of the United Kingdom—althougt one can make a good case for maintaining that he should not do so in Northern Ireland when one takes into account the tourist trade and such factors—one is left with a substantial portion of this £2·3 million, probably anything up to £1½ million or £1¾ million falling as a direct burden on the cost of industry in Ulster.

Mr. Geoffrey Wilson: I do not know whether my hon. and gallant Friend has considered the Report of the Preliminary Results of the Rural Transport Surveys. I know that none of the figures relates to Northern Ireland, but in the various counties which were mentioned in that Report less than 25 per cent. of private motoring was for pleasure or such purposes.

Captain Orr: I am obliged to my hon. Friend. That is what I would have guessed the situation to be. I should, however, like the Minister to give me any kind of breakdown he may have, or to say whether the Treasury has made any estimate about it at all.
It would be overstating the case to say that 6d. on the cost of petrol, £1½ million on the cost to industry in Ulster, would necessarily be catastrophic, but it is very dangerous because, taken with the other measures which the Chancellor of the Exchequer has claimed to be deflationary, the effect upon Northern Ireland if the measures are continued and not, as the hon. Member for Govan said, temporary—will be that at about this time next year there will be a considerable drop in the number of extra jobs found in Northern Ireland. We would have a very dangerous unemployment situation about this time next year.
I ask the Minister to look at this carefully. We are not suggesting that our Amendment is itself necessarily the best method of offsetting the ill-effects of the tax. We are not absolutely wedded to it, but, unless he can tell us in some detail that some measures are to be taken and can spell out what they are, and unless we are satisfied that they are all right, we shall have no hesitation in availing ourselves of the right to a separate Division on this Amendment.
In Ulster we are perfectly prepared, with the rest of the United Kingdom, to take our fair share when deflationary

measures become necessary, but we are not prepared to bear an unfair burden. This would be an unfair burden because when costs of transport rise, as my hon. Friends from Scotland have so well said, deflation is always most severe in the fringe areas, in Northern Ireland and other places.

9.15 p.m.

Mr. Russell Johnston: It has been truly said that a Liberal has very few in the Committee whom he can properly describe as his hon. Friends. Nevertheless, I found it quite surprising tonight to be in agreement to a considerable degree with hon. Members on both sides. I found the remarks of the right hon. Member for Argyll (Mr. Noble) such that I could largely agree with them, and I found the remarks the hon. Member for Western Isles (Mr. Malcolm MacMillan) made about the right hon. Member such that I could agree with them, too.
In moving this Amendment, which seeks to offset the harmful effects of the Bill on certain areas, particularly in Scotland and Northern Ireland, the right hon. Member for Argyll did a great service to the Committee, but some of the things he said were the purest humbug. That is the only word properly to describe them. I do not remember very clearly, but I recall that in 1952 petrol tax was raised from 1s. 10½d. to 2s. 6d. by the then Conservative Administration and there was no mention of regional variations. In 1961 there was the increase from 2s. 6d. to 2s. 9d., and there was the intervening period with the 1s. rise at the time of the Suez operation, to which the hon. Member for the Western Isles has already made reference.
Something surprising seems to be happening on both sides of the Committee. Arguments are being brought forward from the Conservative benches which we have deployed in their very teeth for many years. We have arguments on the other side of the Committee even from the natural-born rebel the hon. Member for the Western Isles defending his Government yet saying what a splendid Amendment this is which the right hon. Member for Argyll moved and, for another 10 minutes, explaining why, although he agrees with it, he will not support it. He was using what appeared for him to be a very specious argument.
I say this also to the hon. Member for Glasgow, Govan (Mr. Rankin) because, so far as I understand, it was never stated by the Chancellor of the Exchequer that the purpose of the petrol tax was to enable the payment of social security benefits to be made. That was something which the Income Tax increase was designed to do.

Mr. Rankin: Is the hon. Member to tell us that the 6d. increase on Income Tax is put into one drawer at the Treasury and the 6d. from the petrol tax is put into another drawer? How does he distinguish between them?

Mr. Johnston: I am in no position to tell the hon. Member; I merely have to go on what the Chancellor of the Exchequer tells us. Most of the remarks of the right hon. Member for Argyll bore close similarity to the maiden speech I made last week. It seems that the prime objections which could be brought against the Amendment are purely technical ones about it being difficult to implement. I think the hon. Member for the Western Isles remarked that no one has either proved the argument or disproved it. I want to know if anyone is to try. We should start trying now to effect regional variations and to make allowance for the difficulties which areas of sparse population suffer.
The hon. Member for Govan was very wrong when he said that an extra tax on petrol will do very little to disturb the Highlands. I think it will do considerable harm, certainly in my constituency and in the North-West, and it is harm which could be avoided. Judging by what hon. Members opposite have said about the Highland Development Board, they seem to indicate their interest in developing the Highland area. For successful development of the Highland area we need cheap transport communications. The increase in the petrol tax will inevitably affect agricultural and industrial costs and the cost of living.
We all know how easy it is for the small shopkeeper to put on an extra ld. The increase in the cost to him may be 2½d., but he decides to charge 3d., passing the cost on to the ordinary public which suffers in that way. In my constituency the problem of administration is very difficult. The county centre is a Inverness, but 66 miles away is the growing

area of Fort William and there is a constant coming and going, so that even the administrative costs of the county council will be exacerbated by this increase in the tax on petrol.

Mr. Ian MacArthur: When the hon. Member for the Western Isles (Mr. Malcolm MacMillan) was speaking, he was kind enough—because he is a very kind man—to suggest that perhaps I was in a mood of some discomfort, and he offered me the chance of interrupting him. In fact, my posture was a reflection not of discomfort, but of astonishment, an astonishment which increased when I heard the speech of the hon. Member for Glasgow, Govan (Mr. Rankin).
We have heard yet again the repetition of the great excuse—that it is very wicked of us to oppose the increase in the petrol duty for Scotland because the money is to be ingathered to pay the increases in retirement pensions. The hon. Member for Govan, dashing the tears away from his eyes, said that if we did not let the tax go through the old folk of Scotland would not be able to get their pensions.
Exactly the same sort of argument was advanced by Labour Members earlier tonight, when we were debating the 6d. increase in the standard rate of Income Tax. That, too, was to pay for old-age pensions. The fact is that the increase in the pensions for the most part will be covered by the increase in the National Insurance stamp. The public must recognise that. In his Budget statement, the Chancellor of the Exchequer himself, speaking of the increase in the pension rates, said:
These improvements must be paid for … National Insurance contributions will, of course, have to go up …
When the Chancellor dealt with oil duty, there was not a word in the whole of that section of his speech about using that money for old-age pensions.

Mr. Rankin: Would not the hon. Gentleman agree that the benefits will be paid for from the increased income going to the Exchequer?

Mr. MacArthur: Certainly, but hon. Gentlemen opposite have been saying that the one great purpose of the increase in petrol duty was to pay for the increase in old-age pensions. What I am saying is that they cannot have it three ways. They


cannot say that petrol duty is paying for the increase, that the 6d. on the standard rate of Income Tax is paying for it, and that the increase in the cost of the stamp is paying for it.

Mr. Malcolm MacMillian: Surely the hon. Gentleman agrees that all three, along with other sources of income, are the means of paying for this increased social benefit. Surely there are not separate compartments. Obviously, in practice, one does not take the proceeds of one tax and put it in one box and say that that will pay for one increase and put the increase in Income Tax in another box and say that that will pay for another increase, and so on.

Mr. MacArthur: No, but the hon. Gentleman and the hon. Member for Govan said that the purpose of this increase was to pay for the increase in the old-age pension. The increase in the petrol duty, the increase in the standard rate of Income Tax and the increase in the stamp are all highly inflationary taxes and, added together, they will pay for the increase in the pensions three times over.
One of the reasons for the increase in duty is the abolition of prescription charges, a step which at least one of the Iron Curtain countries has seen to be retrograde, for it is now introducing a prescription charge, appreciating the economic risk which attends such liberalization.

Sir D. Glover: I want to be helpful to my hon. Friend. In his statement on the increased pensions contribution, the Chancellor of the Exchequer said that the Treasury contribution to the increased pensions was £15 million; but 6d. on Income Tax and 6d. on petrol will raise far more than £15 million.

Mr. MacArthur: I am obliged to my hon. Friend for underlining my argument.
The fact is, as the Chancellor of the Exchequer himself said, that the petrol duty
will exercise an appreciable and immediate disinflationary effect …"—[OFFICIAL REPORT, 11th November, 1964; vol. 701, c. 1032–7.]
It is that which I should now like to examine, but before doing so perhaps there is one thing on which I can agree with the hon. Member for Govan. I was very glad to hear him stress that Arran

and Bute were Highland islands. We have to try at last to sort out just what the Highlands are.

Mr. Rankin: After 13 years?

Mr. MacArthur: I am very glad that the hon. Gentleman said that. I remember mentioning this in my maiden speech, early in 1960. The hon. Member for Govan got up immediately afterwards and congratulated me and said what a good idea it was. I am very glad that he got this good idea from me. My right hon. Friend the then Secretary of State for Scotland wrote to me and accepted this argument in the context in which I was applying it—the application of the Fraser plan. I therefore take credit for this, and it should not go to the hon. Member for Govan.
9.30 p.m.
The Highlands, in the administration of State affairs, are regarded as synonymous with the seven crofter counties. This is a convenient administrative division, but it is not a fair division. I would hasten to show the relevance of the argument to the Amendment by pointing out that the second Scottish Amendment relates to the Highlands and that I am trying to define the Highlands. I suggest to the Committee that in this Amendment, and in other matters, too, the definition of the Highlands should be extended to cover the true Highlands. One has only to look at Scotland to see the Highland line. It is visible—a distinction across the country there for all to see. It is extraordinary that some of the highest reaches of land in the kingdom are excluded because they do not happen to fall within the convenient Scottish Office definition.

Mr. Rankin: Does not the hon. Member realise that the geological fault goes through Perthshire? He speaks of the Highland line. Ought he not to include Perthshire?

Mr. MacArthur: Certainly I do. I include the whole area north and west of Blairgowrie. Those who wish to call on the hon. Member for the Western Isles and enjoy some of the hospitality for which his constituency is so famous—if they have that curious wish—will set off on the road to the Isles and will pass Loch Rannoch, Loch Tummel and approach Lochaber before the Scottish Office recognises that they are in the Highlands.
In his Budget statement the Chancellor said that the purpose of the increase in petrol duty was disinflationary. If that is so, then I join my hon. and gallant Friend the Member for Down South (Captain Orr) in saying that the purpose of the duty is completely irrelevant to the needs of Scotland. There is no cause for disinflationary action in Scotland. The country's economic position does not require disinflationary action, whether in the form of an increase in the petrol duty or in the form of an increase in the Bank Rate.
All these measures impede growth in Scotland. It is growth that we must encourage and growth that the previous Government went all out to get. The people of Scotland will see in the present Chancellor of the Exchequer the 1964 Hammer of the Scots. He has dealt two blows to our country from which it will take us a long time to recover.
I believe that the effect of the increase in duty in Scotland will be inflationary and not deflationary. Already we have seen the evidence. Within a day or two of the increase being announced, road haulage rates went up by 5 per cent. A few days ago, in my constituency, the retail price of delivered milk went up by ½d. a pint to compensate for the increase in the cost of delivery. This is inevitable, because the distances to be covered in delivering any consumer requirement in the far north and centre of Scotland are far greater than in the more crowded constituencies of the South.
I tried to find out what was the average road journey in Scotland but the figure cannot be obtained. Simply as an indication, and no more than that, of the extra length of journey, I would point out that for every lorry in Scotland there is twice as much road as for every lorry in England. This is an indication that a lorry on its journey is likely to travel much further than is the case south of the Border.
Transport costs are an enormous element in Scotland. The cost of the duty increase undoubtedly often will be passed on to the public and so be completely inflationary. There are, however, other examples where the cost cannot be passed on.
One product for which my constituency is justly famous is seed potatoes, which

are often carried by road. This year British Railways, quite rightly, went after the business by offering very attractive transport rates, but, alas, they were not able to provide the wagons needed to carry the potatoes that they wanted to carry, and so many merchants had to send them by road. The increase in the cost of delivering seed potatoes by road is about £2 for the round trip to the Midlands and £3 to the south of England. The total annual increase per lorry over the six active months of seed and ware potato delivery is about £130. The costs of one merchant in my constituency will go up by about £1,000 a year as a direct result of the increase in petrol duty.
This year, the cost cannot be passed on because so many potatoes are being delivered at a contract delivered rate. Who can doubt that in future the housewife will have to pay more for the potatoes which she buys in the shops?
A further concern of mine is this. When industry considers a move to Scotland, one of the disincentives is transport costs. Industrialists fear that by setting up in Scotland they will have to pay very much more for the transport of their products to the conurbations in which they sell them. Under the Conservative Government, we were successful in encouraging much new industry to come to Scotland. I was glad to learn from the Minister of State, Board of Trade this week that up to the end of October this year, under measures of the Conservative Government, £63 million had been made available for new industrial development in Scotland and that since last year's Budget nearly 2,300 applications had been received in respect of new industrial development as a result of the benefits of that Budget. This is a great advance.
Just as we are reaching a critical stage in Scotland's industrial development, the Government slap on a tax which is a positive disincentive to new growth. This is a critical moment. I do not use the phrase lightly. We have at last achieved a major industrial break-through in Scotland. During the past year, for the first time, our rate of new employment growth was greater than that in the rest of Britain.

Mr. Cyril Bence: How many years?

Mr. MacArthur: If the hon. Gentleman doubts that, I refer him to paragraph 13


of the White Paper "Development and Growth in Scotland, 1963–64", Cmnd. 2440. [HON. MEMBERS: "Read it."] If hon. Members press me, I will read it. It says:
Final employment figures are not yet available for mid-1964, but provisional estimates suggest that there has been a rise of at least 11,000 in the number of employees in employment in manufacturing industry alone between mid-1963 and mid-1964, a rise of 1·6 per cent. compared with a rise of 1·3 per cent. in the same period in Great Britain as a whole.
This fact has enormous significance for Scotland, because under the Conservative Government we at last achieved this great break-through—[Laughter.] Hon. Members opposite may laugh at this, but it is of fundamental importance to their constituents and to mine.

Mr. Bence: rose—

Mr. MacArthur: It is at this very point that the Government introduce not only an increase in the petrol tax, but an increase in Bank Rate—two measures which will inevitably hold back the growth of Scotland.
There are 37 or 38 Scottish Labour Members who are not even here to listen to this critical debate. Where are they? It is shameful that they are not here. They should have been here to hear this argument, and to support us in the Division Lobby when we try to crush what is for Scotland a retrograde and damaging measure.

Mr. Michael Clark Hutchison: I wish to support this Amendment for a variety of reasons. It has always seemed to me a quite wise thing so to adjust the tax system as to meet the needs of geography and the various regions within the United Kingdom. There is no fundamental or overriding reason why the taxation system should be the same in all areas. I know that this idea was objected to by the Treasury for many years, but the objection was finally undermined when my right hon. Friend the Member for Barnet (Mr. Maudling) in his Budget two and a half years ago brought in the special depreciation and other allowances which have been such a help in Scotland —[Interruption.]

The Chairman: Order. I must ask the Committee to give the hon. Member a quiet hearing.

Mr. Clark Hutchison: That action of my right hon. Friend was a tremendous benefit to Scotland and has resulted in many new industries coming to our country and inquiries from other industries which may come.
In considering this increase of the fuel tax it must be remembered that in many outlying parts of Scotland fuel costs more than in more central areas, or in England; and any increase is bound to make it more difficult for Industry to go to the Highlands and other areas where all hon. Members, I suggest, wish to see it established. Scottish industries and companies in general have to face higher transport costs than those in the South and nearer to centres of mass markets.
As for road haulage, this fuel tax cannot be absorbed by the companies concerned. I happen to be connected with road haulage and I can tell the Committee that although transport companies may be very efficient, and often are, and are able to compete, and to save costs on all sorts of things like the turn round of vehicles, administration, and routeing, they are quite incapable of absorbing any additions there may be in the costs of vehicles and costs of fuel. These must be passed on to the consumers, and that ultimately will result in dearer goods. If the Government wish to see costs going up in Scotland and goods costing more, then one way of making sure that this happens is to put on the fuel tax.
I turn to one or two other points. This tax will not apply to the railways—to diesel locomotives; but what about the road vehicles which British Railways own? I refer to parcels vans, and the maintenance vans which go out to look after the signalling system, telegraphs and telephones, should there be breakdowns. Are these to be affected? If so, there will be a further loss in the Scottish Region of British Railways.
What is the situation for buses and other vehicles owned by town councils and corporations in Scotland? I know it has been said that there will be a rebate scheme for buses, but if there is such a scheme it will cost time and money in extra clerical work. What I wish to know—perhaps the Minister will pay some attention to this point—is whether or not this rebate is to apply


to other vehicles owned by corporations, such as maintenance vehicles and refuse vehicles.
9.45 p.m.
Since I have been a Member of this House, Edinburgh Corporation has continually pressed me to do my best to see that the fuel tax is reduced, and I am sure that the electors of Edinburgh will note that it is a Socialist Government who are putting up their costs, and will know what to do at the next election.
During the last Parliament we heard constant exhortations from hon. Gentlemen opposite about the need to help Scotland. Many of those speeches were very good, and I agreed with them, but of all things to do, the worst in my opinion—and the one that harms public authorities, businesses and private individuals most—is to increase the fuel tax. Nobody except a stupid and incompetent Government would introduce such a measure.

Mr. Stratton Mills: I have examined the Treasury Bench during this debate, and although there have been three, or possibly four, Ministers representing the Scottish Office present all the time, it is a matter of some disappointment to hon. Members who represent Northern Ireland that no one from the Home Office, which is responsible for Northern Ireland, has been present to help us in pressing our needs.
It will be interesting to hear the Government's reply to this debate. I am certain that if the Chief Secretary looks at his brief he will find, as in all Treasury briefs, a hefty section marked, "Administrative difficulties". He may wish to base his argument about Scotland on that point, but I hope he will not use this argument with regard to Northern Ireland for the reasons one of my hon. Friends made clear. There are obvious advantages in being a self-contained area, and different price levels for petrol in Southern Ireland and Northern Ireland have never created any difficulty.
During the last few years there has been a much greater movement towards regional variation in taxation, and in the general approach to this problem. Again, as one of my hon. Friends said, free depreciation has been introduced on a

regional basis, and in Northern Ireland there is a subsidy for oil and coal used in industry. This is another example of regional variation, and I could give many others. I hope that the Minister will address his mind to the overall pattern of the Budget, and to the utter irrelevancy of measures of this kind to areas like Northern Ireland.
On 24th November, the Chancellor of the Exchequer said:
The disinflationary effect of the Budget is greater than many people have understood or have said."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1104.]

The Chairman: Order. If the hon. Member summarises what the Chancellor said, he will be in order.

Mr. Stratton Mills: I beg your pardon, Dr. King.
Time and again during his Second Reading speech the Chancellor referred to the disinflationary effects of the Budget. If a madman had escaped in the Treasury, and in the sequence of a James Bond novel had smuggled himself into the Chancellor's room and delivered the Budget which the right hon. Gentleman delivered, he could not have found a more irrelevant piece of machinery for areas of unemployment to bring before the House.
Areas such as Northern Ireland and Scotland, which are struggling to develop and to encourage new industry, will be greatly hit by this type of measure. In fact, to them it is positively unfair, in that the distances which people travel in the prosperous South and Midlands are very much shorter than those which people travel in Scotland and Northern Ireland, owing to the outlying nature of the countryside. I have calculated that an ordinary motorist, doing about 12,000 miles a year in a car which does 30 miles to the gallon, will pay an extra £10 a year in tax. The Government may say that that is not very much, but all these additional burdens are making themselves felt in areas like Northern Ireland.
Following his 1961 Budget my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) thought fit to use the money collected in Northern Ireland from the regulator tax for public investment purposes in that country. I suggest that the Chief Secretary should


consider whether this type of duty cannot be used similarly for public investment in Northern Ireland. I ask him to give an assurance that this issue will be discussed with the Northern Ireland Government.

The Chief Secretary to the Treasury (Mr. John Diamond): After a most interesting and fairly full debate, I think that it would be convenient if I were to tell the Committee what the views of the Government are on this group of Amendments, which are of considerable importance and have been argued with lucidity and force by right hon. and hon. Members on both sides of the Committee.
The purpose of the three Amendments is very clear, and it is one with which no one would disagree. The purpose is to encourage development in certain areas. The reason why neither my hon. and right hon. Friends nor I would attempt to disagree with that purpose is that the need for development in certain areas is very great, and has been for a long time. It is a measure of the circumstances which we find ourselves facing that we have to deal with these matters, and that there is so much interest in this debate. I take it as a great compliment to the Government that most hon. Members opposite have based their case on the assumption that we should have done in 40 days what they should have done in over 4,000 days. It is natural that we should work ten times as fast: working a hundred times as fast is a little challenging—but we will do our best.
Let us get the case absolutely clear; the reason for these Amendments are the circumstances which we find as a new Administration taking over. There is no disagreement among us that help is required; the question is: how can we best help? The method suggested in the Amendments is one which does not find support on this side of the Committee. The main reason is that which was put forward by the Conservative Government whenever there was a measure which increased petrol duty. The Conservative Government never—I repeat, never—attempted any kind of regional differentiation, because they knew that it was impossible for all practical purposes. There is no difference between this Government and the Conservative Government on that fact; it is for all

practical purposes impossible to institute regional differentiation.
The impossibility is admittedly greater in the Highlands than in Scotland generally, and greater in Scotland than in Northern Ireland, but in all cases it is an impossibility. It is impossible, because of the wording of the Amendments. We never draw too much attention to that in these debates, because in Committee we can always alter the words if we desire. But the wording draws attention to the question of oil for sale. Our attention is being directed to the sale, and not to the use of the oil, not to the region where the oil is to be used.
I should have thought that what is in the minds of the supporters of the Amendments is the place where the petrol is to be used. This is administratively unworkable, because the duty is collected at the point at which the petrol leaves the bonded warehouses which are widespread, and there is no means whatever of identifying a particular gallon of petrol as it leaves a bonded warehouse with the use to which it is to be put, which is the whole purpose of this group of Amendments.
I recognise the point raised by the hon. Member for Belfast, North (Mr. Stratton Mills), but it is not possible to identify it in the case of Northern Ireland because of the border difficulty. It was obviously difficult in relation to the Highlands of Scotland. Listening to the debate it became perfectly clear that there is no definition of the Highlands which is acceptable to both sides of the Committee. In Ireland, this would not be possible, because a great deal of the petrol for Northern Ireland comes from warehouses in Great Britain and it is not possible to identify it at every point.
The first point, as has been recognised by every Government, is that it is not possible in this way to do what it is sought to do. There is the further obvious point of exploitation; it is so obvious that it needs only to be mentioned to be understood. It is the attempt at exploitation by persons on one side of the border to buy petrol in a cheaper area—if there were a cheaper area—and using it in an area for which it was not intended. There is no possible way to stop that from happening.
What we are concerned with is not the purpose of these Amendments, but


the method of achieving it. By far the better methods of achieving regional development are those which my right hon. Friend the First Secretary is concerned with, in the development of economic affairs and the proposals which he has already brought before the House. He has indicated the lines which we are adopting. It would not be right for me to go into them in great detail, but they are fundamental and profound, and are concerned with the economy and its development in these areas. That is the way in which this should be done, not by administratively impracticable and unworkable arrangements relating to some indirect taxation.
The hon. Member for Belfast, North was wrong when he attempted to say that there were precedents for what is being suggested. There are not. There are precedents for dealing by a regional method with direct taxation, but there is no case of any kind where indirect taxation has been dealt with differently in different regions because of the administrative situation. The point I wish to make—it is something that we should accept and understand—is that we are anxious to achieve what all the hon. Members who have spoken and have put their names to these Amendments are anxious to achieve, but the method proposed is not workable and is not a satisfactory method. In attempting to achieve what we all want to achieve the methods of the Government are better.
Before coming to the detailed points I wish to refer to something which has been mentioned before, the cost involved, which is £8 million, so far as Scotland is concerned, and approximately £2½ million for Northern Ireland, a total of £10½ million. Having regard to the pressure of demand on the economy as a whole and the need to make room for exports which is a crying and insistent need—

Sir D. Glover: In Ireland?

10.0 p.m.

Mr. Diamond: Which is a crying and insistent need. This shows that one could not, without complete irresponsibility, accept Amendments which had

an effect on the demand on our resources of a kind that will arise if £10½ million additional purchasing power were suddently brought to bear, which is what would happen if these Amendments were accepted.
Having dealt with the matter in general, and shown that it is not possible to accept these Amendments, I propose to answer some of the detailed points which have been put to me during the debate. The right hon. Member for Argyll (Mr. Noble), who opened this debate, referred to the tourist traffic, and nobody is keener than I am to encourage the tourist traffic. He thought that this would be a great deterrent, that people coming from abroad would be deterred by the size of the increase in the petrol tax. [HON. MEMBERS: "No."] That is what he said.

Mr. Noble: I put the argument exactly the opposite way round. I said that it would be a great encouragement to tourism if petrol were cheaper.

Mr. Diamond: I am sorry that there is a misunderstanding. I thought that that was exactly what I was saying—that the proposal in the Bill would act as a deterrent, according to what the right hon. Gentleman has argued.
I do not accept this at all, because of its scale. The suggestion is that a visitor from Belgium who pays 3s. 5½d. duty for his gallon of petrol would be put off by our 3s. 3d. a gallon duty. I do not accept that a visitor from Italy who spends 4s. 4½d. duty on his gallon of petrol would be deterred from coming here, where the tax is 3s. 3d. I do not accept that a visitor from France who pays a duty of 4s. 9d. on a gallon of petrol would be deterred from coming here, where the proposed rate is 3s. 3d.
Nor do I accept that an intending visitor from the United States would be put off when he found that the cost of hiring a car and touring around Britain would be one-fifth of 1d. a mile more than he had thought it would be, and that, therefore, he will cancel his trip. These just are not realistic figures. There is no problem whatsoever of that aspect of it.
The question that the right hon. Gentleman further dealt with was that of the rural population and the difficulty of transport, both by bus and by car.


I have been impressed, as I have listened to the whole of the debate, with the need which is recognised on both sides of the Committee for more buses for Scotland, particularly in the rural areas. These are the circumstances which derive from the Administration which preceded ours. One must recognise this. There have been complaints by my hon. and right hon. Friends, when on that side of the Committee, for the past 13 years on this very topic. I want to make it clear that it is no part of the intention of Her Majesty's Government to make any more difficult the problem of buses catering for fare stages in the ordinary way.
As has already been announced, my right hon. Friend the Minister of Transport has had preliminary discussions with the bus operators and it is expected that a satisfactory conclusion will be reached to the points which have been discussed and will result in removing, if not the whole, at least a very substantial measure of any possible additional difficulty which is being put on buses as a result of the proposed increase of 6d. a gallon. I have already said that it is an extra one-fifth of 1d. a mile for cars, and I find it difficult to believe that a person who has, as I was told, to travel 100 miles if he wants to go to a cinema, will be put off by having to pay that extra one-fifth of 1d. a mile.
The right hon. Member for Berwick and East Lothian (Sir W. Anstruther-Gray) referred to the addition to the cost of living. I repeat figures given in the Budget statement. It is regrettable that an increase is necessary, and I have already explained why it is, but the immediate increase in the cost of living is one-fifth of a point. Ultimately, when the cost of this additional taxation has gone right through and come out in the form of prices, it may be as high as half a point.
The answer to those who said that, inevitably, such an increase in taxation means an additional charge at the end of the day is that we are asking that when an additional cost like this occurs, it should not automatically be put on prices and passed to the consumer. What everyone running a business and industry must do is to say, "This is a challenge. I must see by what greater efficiency, by what new thinking and by what new plant I can avoid passing on

any of this increased cost". It is not until this attitude is so ingrained in every director and chairman of a business that we shall get a proper attitude to prices. Every worthwhile businessman will accept what I am saying without hesitation.

Mr. MacArthur: I shall be interested to know whether the right hon. Gentleman's statement in the Budget about the increase in the cost of living takes into account the increase of ½d. a pint in the delivered price of milk, to which I referred earlier. It is impossible for the milk producer, working on a tiny margin, to absorb an extra cost of this kind in his normal running operation.

Mr. Diamond: I cannot accept in a general way that it is impossible for anybody running a business to increase the efficiency of that business so as to absorb a small additional charge which may arise. If one is running a business, the first way in which to meet any increased cost is to ask how one can absorb it without passing any of it on at all. That is the attitude which we must encourage.
The answer to the hon. Member's question, when he asked whether all these things had been taken into account, is, "Yes". The best estimate one can give, taking into account a whole series of stages which will arise, is that when the additional cost has worked all the way through there will be in increase of less than half a point. The immediate increase is about one-fifth of a point in the cost-of-living index. On any of these grounds, therefore, we are entitled to reject the arguments which have been advanced and to accept the duty as a necessary part of getting the economy of the country back on to a proper keel. Does the hon. Member for Ormskirk (Sir D. Glover) wish to intervene?

Sir D. Glover: I am waiting for the hon. Member to conclude his speech.

Mr. Diamond: I recognise that hon. Members on both sides of the Committee want to get on with the Bill. We have been discussing this group of Amendments for over two hours and there are three other Amendments on this Clause alone, and other Amendments, too, which hon. Members wish to discuss.
If I could I would give the hon. and gallant Member for Down, South (Captain Orr) a breakdown of the figures for Northern Ireland, but it is not possible to divide them between this country and Northern Ireland. The complete breakdown of the figures was given during the debate. In broad terms, approximately one-third is in respect of private motoring—not business motoring; a little over 50 per cent. in respect of industry and commerce as a whole; with the balance taken up with minor matters. I have no knowledge whether the breakdown would be on almost identical lines in Northern Ireland, but the hon. and gallant Member can draw his own conclusions from his knowledge of a comparison between the two countries.
We recognise the unemployment position in Northern Ireland. We should do. We drew attention to it from the benches opposite for 13 years. This is part of the process of putting that right. [Interruption.] Indeed it is. We will never be able to deal with the economy of Northern Ireland until the economy of the United Kingdom as a whole is strong and growing again and until we have our balance of payments right. As part of getting our balance of payments right we must—and I repeat "must"—stop some imports coming in and have more exports going out. To provide room for those exports we must relieve part of the pressure of demand in the way we are doing.
These are all logical steps to help deal with unemployment in Northern Ireland, the Highlands, Scotland and elsewhere. Until people are prepared to take a long and responsible view we will make no progress whatever.

Mr. Stratton Mills: Is not the Minister giving a classical exposition of the theory of stop-go?

Mr. Diamond: I hesitate to try your patience unduly, Dr. King, and I recognise that this debate touches on wider aspects although we are dealing with a series of Amendments. The short answer to the hon. Gentleman is a very solid "No, it does not." The Conservative stop-go means putting men off the bench into the street. What we are doing is to keep everybody at work.

Captain Orr: Even if we accept the argument that deflationary measures may be necessary for the economy as a whole, and that it is in the interests of Northern Ireland that such measures should be taken, is the Minister not going to say what special measures the Government propose to take for Northern Ireland?

Mr. Diamond: We are dealing with a group of Amendments which relate to petrol duty and to the exclusion of it in relation to certain regions. I have explained, against the general economic background, how we are anxious to help. I have indicated the best method of help and I have demonstrated that the method proposed in the Amendment falls far short of being the best method.
I hope that I have dealt with all the points raised in the debate, although I appreciate that I was asked whether the export rebate would cover the additional petrol duty, be it on lorries or whatever the case may be. The answer is that it will, and that it will go the whole way through. The time to cover that will be in regard to the general percentage which is being negotiated. But it cannot possibly have a damaging effect on our exports. It cannot have more than a very minimal effect on the cost of living. It is part of the price that we have to pay to get our economy strong and I am bound, therefore, to ask the Committee to reject the Amendment.

Mr. Stanley R. McMaster: I am glad to have an opportunity to address the Committee on this subject. I abstained from interrupting the Minister, although I felt that he was wrong in certain of the facts he presented, because I am sure that he had no wish to mislead the Committee. Since coming to the House of Commons not long ago I have been glad to see the unemployment rate in Northern Ireland fall from 11 per cent. to its present 5½ per cent.
Although the Amendment as drafted may not meet the wishes of the Committee, I do not see why the Government could not alter it, just as the then Government altered a similar Amendment which I presented two or three years ago when I sought to exempt Northern Ireland from the payroll tax. I remind hon. Members opposite that the then Government listened to the arguments which were adduced, accepted them and then chose


their own method of drafting a suitable Amendment. The arguments advanced then are equally applicable today.
10.15 p.m.
As my hon. and gallant Friend the Member for Down, South (Captain Orr) has elaborated, we in Northern Ireland are suffering from a severe and difficult unemployment problem—more severe even than that which has been mentioned by Scottish Members. The Chief Secretary to the Treasury stated that it was impossible to differentiate in the case of Northern Ireland because a lot of petrol in Northern Ireland comes from depôts in England. I should like him to examine this point particularly, because the duty on petrol brought into Northern Ireland is levied in Northern Ireland and it is quite possible to treat that petrol separately. Therefore, I ask him between now and Report to reconsider the point.

Mr. Arthur Lewis: If it is so simple, why did not the previous Government do this when they increased the petrol duty on a number of occasions?

Mr. McMaster: I do not wish to delay the Committee at this late hour. I have shown one way in which the last Government helped Northern Ireland and reduced unemployment in the course of 12 months by 2 per cent. If the present Government can reduce unemployment there by 2 per cent. in the next 12 months it will be very much to their credit.
I should like to direct the attention of hon. Members opposite to a passage in their own White Paper, "The Economic Situation". Paragraph 13 on page 4 states:
The Government will foster more rapid development in the under-employed areas of the country.
Does this proposal do anything to foster more rapid development in Northern Ireland? I do not think so. I for one could not accept the explanation given by the Chief Secretary. I sincerely ask him to reconsider this point and to see if he can do something more to reduce our very severe unemployment in Northern Ireland.

Mr. Geoffrey Lloyd: I do not think the Chief Secretary has made out his case this evening, and I should like briefly to explain why. He was sympathetic to

the general theme that we wish to help Northern Ireland, and I am addressing my remarks particularly to the problem of Northern Ireland. He almost gave the impression that if it had been possible to accept our Amendment he might have considered it favourably. He indicated, indeed, that he would not pay too much attention to the actual form of the Amendment. He did not want to dwell too much on any technical explanations in it.
Then the hon. Gentleman argued that because the petrol came from dêpots in this country where it could not easily be distinguished, he felt it was a practical impossibility to deal with the problem. He also said that we on these benches had done so little and that the present Government were having to deal with a situation that they had inherited. I should like to point out that in the matter of coal the last Government dealt with this problem. Coal also comes from dêpots in this country and is indistinguishable. Therefore, if one were to accept the hon. Gentleman's argument, one might say that it was administratively impracticable to deal with the problem. But in spite of the boasts of what the party opposite has done in the last few days and the hon. Gentleman's somewhat derisory comments about us, in fact we solved this problem. It was not an easy problem to solve, nor was it politically easy, because the Treasury is a very powerful Department and the Treasury does not like subsidies
The last Government were able to deal with this problem by means of a subsidy on coal which went to and was used in Northern Ireland. That was for the very reason the hon. Gentleman has mentioned—and to which he is rather sympathetic—that we wished to encourage the industrial development of Northern Ireland. Not only did we deal with the problem about coal, but we put a subsidy on oil for Northern Ireland also.
I suggest that if the hon. Gentleman did not give way so easily to the administrative difficulties to which Ministers find it so easy to give way, he could do the same. In this respect the last Government did not give way. They forced their way through to a solution, and the hon. Gentleman could find a solution to the problem on the lines which we


so successfully followed in relation to coal and oil. He suggested that exporters should solve the problem with extra dynamism and find a way through. If he tackled this problem in the same spirit he would find a solution.

Sir Knox Cunningham: I do not wish to detain the Committee at this hour for long, but this is a much too important debate for Ulster to leave it without saying a few words. I listened very attentatively to what the Chief Secretary said about administrative difficulties. I am not wedded to the particular terms of the Amendment, but I ask him to accept the spirit behind it.
My right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) referred to the subsidy given both in respect of coal and oil to help Ulster. If a similar method could achieve the same result in this problem it would be a matter of considerable importance to the community in Ulster. It would be important for farmers who of necessity use their cars for business and find costs going up. All this would be of very considerable importance to the Ulster community. These "impossibilities" are not really impossible. The Chief Secretary could find a way of getting round them if he sets his mind to it. He said that it would take £2½ million out of the purchasing power of Ulster. What is that but deflation? What is that if it is not doing hurt and harm to the economy and people there?
If he would not put his mind to these ideas, but try to find a way of alleviating great hardship in Ulster, Ulster and the Committee would be most grateful to him. If he is not to do that, and use his ability in that way, of course we must press this Amendment to a Division.

Sir D. Glover: Until the Chief Secretary replied to this debate, I had no intention of intervening. Anyone who intervenes in a debate largely devoted to Northern Ireland and Scotland and does not know those areas is acting with great trepidation. I do so because for two and a half years during the war I slept on nearly every mountain in Scotland. I have never disclosed this in the House because I was afraid of being put on a

Scottish Committee. I do know the problems of Scotland.
The hon. Gentleman said that it would cost £10½ million. Living in the lush areas of Gloucestershire and London, he does not know what he is talking about when he speaks about increased efficiency. How can a chap who collects milk from five farms over an area of 50 or 100 miles increase his efficiency by a halfpenny a mile? How does the man who goes over vast distances to collect eggs increase efficiency to meet this on-cost in his Budget? It is obvious that the Chief Secretary does not understand the problems of Northern Ireland and does not appreciate the problems of the Highlands of Scotland.
I point out to the hon. Gentleman that even during the war food was not rationed north of the Caledonian Canal because it was not considered administratively worth while to do so. If it was not considered at that time that there would be a great flood into the rationed areas, does he think that the concession on the petrol duty north of the Caledonian Canal would make many people drive north of the Canal? If the duty did not apply north of the Border between England and Scotland how many people in England would drive over the Border to collect their petrol? On the basis of it costing another 6d. it would not be worth their while doing so, but the total cost to Scotland will be £8 million.
This will be very deflationary in areas where we are trying to increase employment. It will provide a marginal disincentive to expansion of industry. How many people from England will go to collect petrol in Scotland under those conditions? Suppose there were an increase in the number of tourists who went to Scotland.
For years we have been trying to increase the tourist trade which could be helped by this new Administration overcoming the difficulties if they would look at the problem as it is. This is not an administrative impossibility. The Chief Secretary would become very popular if these concessions were made. He would be providing a very big incentive for the continued growth of industry in both Northern Ireland and Scotland, and I therefore ask him to reconsider before it is too late.

10.30 p.m.

Mr. Noble: The hon. Member for the Western Isles (Mr. Malcolm MacMillan) suggested that it was impudent of me to be censorious. It was staggering to me to listen to him at the end of his speech practically reading from a Treasury brief. When we came to the real Treasury brief, I was sure that it was very familiar to the hon. Gentleman, although not out of his own mouth. He began by saying that for all practical purposes our proposal was impossible, an argument largely demolished by my right hon. and hon. Friends since, and he then proceeded on the other well-known Treasury tack to argue the housemaid's baby case—that it did not really matter because it was only a little one. There was no doubt that he convinced no one on this side of the Committee or, I suspect, on his, that what is disinflationary—a word which the Treasury seems to prefer to "deflationary"—to the tune of £10½ million for these areas of the country where we are trying to get industry going is something which we can shrug off as of no importance.
I call the hon. Gentleman's attention to one short passage from this famous document "Signposts for Scotland",

which he may or may not have had the misfortune to read. Talking of the first consideration of a Socialist Chancellor of the Exchequer, it says:
We are determined that the money shall come from those who can best afford to reduce their personal expenditure. The restriction on luxury spending and extravagant consumption will both control the inflationary pressures which they bring into operation and release resources of all kinds for necessary development. Scotland will stand to gain more from this fairer sharing of both benefits and burdens just because of our present relatively greater needs.
If the Government had paid some attention to that!

We do not complain that they have not put Scotland entirely right in 40 days but that they have taken a great number of positive measures which, on their own admission, damage Scotland and Northern Ireland and that they will make no concessions on this except to talk about a vague plan which they hope one day to bring in, and I will ask my right hon. and hon. Friend to divide the Committee on this Amendment.

Question put, That those words be there inserted:—

The Committee divided: Ayes 196, Noes 215.

Division No. 13.]
AYES
[10.31 p.m.


Agnew, Commander Sir Peter
Clarke, Brig. Terence (Portsmth, W.)
Fraser, Ian (Plymouth, Sutton)


Alison, Michael (Barkston Ash)
Cole, Norman
Gardner, Edward


Allason, James (Hemel Hempstead)
Cooke, Robert
Gibson-Watt, David


Anstruther-Gray, Rt. Hn. Sir W.
Cooper, A. E.
Gilmour, Sir John (East Fife)


Astor, John
Cooper-Key, Sir Neill
Glover, Sir Douglas


Atkins, Humphrey
Costain, A. P.
Gower, Raymond


Awdry, Daniel
Courtney, Cdr. Anthony
Grant, Anthony


Baker, W. H. K.
Craddock, Sir Beresford (Spelthorne)
Grieve, Percy


Balniel, Lord
Crawley, Aidan
Griffiths, Eldon (Bury St. Edmunds)


Barlow, Sir John
Crosthwaite-Eyre, Col. Sir Oliver
Griffiths, Peter (Smethwick)


Batsford, Brian
Crowder, F. P.
Grimond, Rt. Hn. J.


Beamish, Col. Sir Tufton
Cunningham, Sir Knox
Hall, John (Wycombe)


Berkeley, Humphry
Curran, Charles
Hall-Davis, A. G. F.


Berry, Hn. Anthony
Currie, G. B. H.
Hamilton, Marquess of (Fermanagh)


Bessell, Peter
Dalkeith, Earl of
Harris, Frederic (Croydon, N. W.)


Biffen, John
Dance, James
Harris, Reader (Heston)


Biggs-Davison, John
Davies, Dr. Wyndham (Perry Barr)
Harrison, Col. Sir Harwood (Eye)


Bingham, R. M.
d'Avigdor-Goldsmid, Sir Henry
Hastings, Stephen


Birch, Rt. Hn. Nigel
Dean, Paul
Hawkins, Paul


Black, Sir Cyril
Deedes, Rt. Hn. W. F.
Hay, John


Bowen, Roderic (Cardigan)
Digby, Simon Wingfield
Heald, Rt. Hn. Sir Lionel


Box, Donald
Dodds-Parker, Douglas
Higgins, Terence L.


Boyd-Carpenter, Rt. Hn. J.
Donaldson, Cmdr. C. E. M.
Hill, J. E. B. (S. Norfolk)


Boyle, Rt. Hn. Sir Edward
Doughty, Charles
Hirst, Geoffrey


Brewis, John
Drayson, G. B.
Hornby, Richard


Brinton, Sir Tatton
du Cann, Edward
Homsby-Smith, Rt. Hn. Dame P.


Brooke, Rt. Hn. Henry
Eden, Sir John
Howe, Geoffrey (Bebington)


Brown, Sir Edward (Bath)
Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Hunt, John (Bromley)


Bruce-Gardyne, J.
Emmet, Hn. Mrs. Evelyn
Hutchison, Michael Clark


Buchanan-Smith, Alick
Fell, Anthony
Iremonger, T. L.


Buck, Antony
Fletcher-Cooke, Charles (Darwen)
Irvine, Bryant Godman (Rye)


Carlisle, Mark
Fletcher-Cooke, Sir John (S'pton)
Jennings, J. C.


Chataway, Christopher
Forrest, George
Johnston, Russell (Inverness)


Chichester-Clark, R.
Foster, Sir John
Jones, Rt. Hn. Aubrey (Hall Green)


Clark, William (Nottingham, S.)
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
Jopling, Michael




Kerr, Sir Hamilton (Cambridge)
Morgan, W. G.
Stainton, Keith


Kershaw, Anthony
Morrison, Charles (Devizes)
Talbot, John E.


Kilfedder, James A.
Morrison, John (Salisbury)
Taylor, Edward M. (G'gow, Cathcart)


Kimball, Marcus
Mott-Radclyffe, Sir Charles
Taylor, Frank (Moss Side)


King, Evelyn (Dorset, S.)
Murton, Oscar
Temple, John M.


Kitson, Timothy
Nicholson, Sir Godfrey
Thatcher, Mrs. Margaret


Lambton, Viscount
Noble, Rt. Hn. Michael
Thompson, Sir Richard (Croydon. S.)


Legge-Bourke, Sir Harry
Nugent, Rt. Hn. Sir Richard
Thorpe, Jeremy


Litchfield, Capt. John
Orr, Capt. L. P. S.
Tiley, Arthur (Bradford, W.)


Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Orr-Ewing, Sir Ian
Tilney, John (Wavertree)


Lloyd, Ian (P'tsm'th, Langstone)
Osborn, John (Hallam)
Turton, Rt. Hn. R. H


Lloyd, Rt. Hn. Selwyn (Wirral)
Page, John (Harrow, W.)
Tweedsmuir, Lady


Longbottom, Charles
Page, R. Graham (Crosby)
van Straubenzee, W. R.


Lubbock, Eric
Percival, Ian
Vaughan-Morgan, Rt. Hn. Sir John


Lucas-Tooth, Sir Hugh
Peyton, John
Vickers, Miss Joan


Mackie, George Y. (C'ness &amp; S'land)
Pickthorn, Sir Kenneth
Walder, David (High Peak)


McLaren, Martin
Pitt, Dame Edith
Walker, Peter (Worcester)


MacIeod, Rt. Hn. Iain
Powell, Rt. Hn. J. Enoch
Walker-Smith, Rt. Hn. Sir Derek


McMaster, Stanley
Prior, J. M. L.
Walters, Dennis


McNair-Wilson, Patrick
Pym, Francis
Ward, Dame Irene


Marten, Neil
Quennell, Miss J. M.
Weatherill, Bernard


Maude, Angus E. U.
Rawlinson, Rt. Hn. Sir Peter
Whitelaw, William


Maudling, Rt. Hn. Reginald
Redmayne, Rt. Hn. Martin
Wills, Sir Gerald (Bridgwater)


Mawby, Ray
Roberts, Sir Peter (Heeley)
Wilson, Geoffrey (Truro)


Maxwell-Hyslop, R. J.
Roots, William
Wise, A. R.


Maydon, Lt.-Cmdr. S. L. C.
Russell, Sir Ronald
Wolrige-Gordon, Patrick


Meyer, Sir Anthony
Scott-Hopkins, James
Wood, Rt. Hn. Richard


Mills, Stratton (Belfast, N.)
Sharples, Richard
Wylie, N. R.


Miscampbell, Norman
Shepherd, William
Yates, William (The Wrekin)


Mitchell, David
Sinclair, Sir George



Monro, Hector
Smith, Dudley (Br'ntf'rd &amp; Chiswick)
TELLERS FOR THE AYES:




Mr. MacArthur and Mr. More.




NOES


Albu, Austen
Duffy, Dr. A. E. P.
Jenkins, Hugh (Putney)


Allaun, Frank (Salford, E.)
Dunn, James A.
Jones, Dan (Burnley)


Alldritt, W. H.
Dunnett, Jack
Jones, J. Idwal (Wrexham)


Allen, Scholefield (Crewe)
Edelman, Maurice
Jones, T. W. (Merioneth)


Armstrong, Ernest
Edwards, Rt. Hn. Ness (Caerphilly)
Kelley, Richard


Atkinson, Norman
Edwards, Robert (Bilston)
Kenyon, Clifford


Bacon, Miss Alice
English, Michael
Kerr, Mrs. Anne (R'ter &amp; Chatham)


Bagier, Gordon A. T.
Ennals, David
Kerr, Dr. David (W'worth, Central)


Barnett, Joel
Ensor, David
Lawson, George


Beaney, Alan
Evans, Albert (Islington, S.W.)
Leadbitter, Ted


Bellenger, Rt. Hn. F. J.
Fernyhough, E.
Lee, Miss Jennie (Cannock)


Bence, Cyril
Finch, Harold (Bedwelty)
Lever, Harold (Cheetham)


Bennett J. (Glasgow, Bridgeton)
Fitch, Alan (Wigan)
Lewis, Arthur (West Ham, N.)


Binns, John
Fletcher, Sir Eric (Islington, E.)
Lewis, Ron (Carlisle)


Bishop, E. S.
Fletcher, Ted (Darlington)
Lomas, Kenneth


Blackburn, F.
Fletcher, Raymond (Ilkeston)
Loughlin, Charles


Blenkinsop, Arthur
Floud, Bernard
Mabon, Dr. J. Dickson


Boardman, H.
Foley, Maurice
McBride, Neil


Boston T. G.
Foot, Michael (Ebbw Vale)
MacDermot, Niall


Bowden, Rt. Hn. H. W. (Leics S. W.)
Freeson, Reginald
McGuire, Michael


Boyden, James
Galpern, Sir Myer
McInnes, James


Braddock, Mrs. E. M.
Garrett, W. E.
McKay, Mrs. Margaret


Bradley, Tom
Garrow, A.
MacKenzie, Gregor (Rutherglen)


Broughton, Dr. A. D. D.
Ginsburg, David
Mackie, John (Enfield, E.)


Brown, Hugh D. (Glasgow, Provan)
Gourlay, Harry
MacMillan, Malcolm


Buchan, Norman (Renfrewshire, W.)
Gregory, Arnold
Mahon, Peter (Preston, S.)


Butler, Mrs. Joyce (Wood Green)
Grey, Charles
Mahon, Simon (Bootle)


Callaghan, Rt. Hn. James
Hale, Leslie
Mallalieu, E. L. (Brigg)


Carmichael, Neil
Hamilton, James (Bothwell)
Mallalieu, J. P. W. (Huddersfield, E.)


Carter-Jones, Lewis
Hamilton, William (West Fife)
Manuel, Archie


Castle, Rt. Hn. Barbara
Hamling, William (Woolwich, W.)
Mapp, Charles


Coleman, Donald
Harper, Joseph
Mason, Roy


Conlan, Bernard
Harrison, Walter (Wakefield)
Mendelson, J. J.


Corbet, Mrs. Freda
Hart, Mrs. Judith
Mikardo, Ian


Craddock, George (Bradford, S.)
Hayman, F. H.
Millan, Bruce


Crawshaw, Richard
Hazell, Bert
Miller, Dr. M. S.


Cullen, Mrs. Alice
Herbison, Rt. Hn. Margaret
Morris, Alfred (Wythenshawe)


Dalyell, Tam
Hobden, Dennis (Brighton, K'town)
Morris, Charles (Openshaw)


Davies, G. Elfed (Rhondda, E.)
Holman, Percy
Morris, John (Aberavon)


Davies, Harold (Leek)
Horner, John
Murray, Albert


Davies, Ifor (Gower)
Houghton, Rt. Hn. Douglas
Neal, Harold


Davies, S. O. (Merthyr)
Howell, Denis (Small Heath)
Newens, Stan


de Freitas, Sir Geoffrey
Howie, W.
Noel-Baker, Francis (Swindon)


Delargy, Hugh
Hoy, James
Norwood, Christopher


Dempsey, James
Hughes, Emrys (S. Ayrshire)
Oakes, Gordon


Diamond, John
Hunter, Adam (Dunfermline)
Oram, Albert E. (E. Ham, S.)


Dodds, Norman
Hunter, A. E. (Feltham)
Orbach, Maurice


Doig, Peter
Irvine, A. J. (Edge Hill)
Orme, Stanley


Donnelly, Desmond
Irving, Sydney (Dartford)
Oswald, Thomas



Janner, Sir Barnett








Owen, Will
Rowland, Christopher
Varley, Eric G.


Padley, Walter
Sheldon, Robert
Wainwright, Edwin


Page, Derek (King's Lynn)
Shore, Peter (Stepney)
Walden, Brian (All Saints)


Palmer, Arthur
Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)
Walker, Harold (Doncaster)


Pannell, Rt. Hn. Charles
Short, Mrs. Renée (W'hampton, N. E.)
Wallace, George


Pargiter, G. A.
Silkin, John (Deptford)
Warbey, William


Park, Trevor (Derbyshire, S. E.)
Silkin, S. C. (Camberwell, Dulwich)
Watkins, Tudor


Pavitt, Laurence
Silverman, Julius (Aston)
Weitzman, David


Pearson, Arthur (Pontypridd)
Silverman, Sydney (Nelson)
Wells, William (Walsall, N.)


Pentland, Norman
Slater, Mrs. Harriet (Stoke, N.)
Wilkins, W. A.


Perry, E. G.
Slater, Joseph (Sedgefield)
Willey, Rt. Hn. Frederick


Prentice, R. E.
Small, William
Williams, Alan (Swansea, W.)


Probert, Arthur
Solomons, Henry
Williams, Mrs. Shirley (Hitchin)


Redhead, Edward
Spriggs, Leslie
Williams, W. T. (Warrington)


Rees, Merlyn
Stones, William
Willis, George (Edinburgh, E.)


Rhodes, Geoffrey
Stross, Sir Barnett (Stoke-on-Trent, C.)
Wilson, William (Coventry, S.)


Richard, Ivor
Swam, Thomas
Winterbottom, R. E.


Roberts, Albert (Normanton)
Symonds, J. B.
Woodburn, Rt. Hn. A.


Robertson, John (Paisley)
Taverne, Dick
Woof, Robert


Rodgers, William (Stockton)
Taylor, Bernard (Mansfield)
Wyatt, Woodrow


Rogers, George (Kensington, N.)
Thomas, George (Cardiff, W.)



Rose, Paul B.
Thomas, Iorwerth (Rhondda, W.)
TELLERS FOR THE NOES:


Ross, Rt. Hn. William
Tinn, James
Mr. Whitlock and Mr. McCann.



Urwin, T. W.

Amendment proposed: In page 2, line 6, at end insert:
on oils for sale otherwise than in Northern Ireland and at the rate of two shillings and nine pence on oils for sale in Northern Ireland."—[Captain Orr.]

Question put, That those words be there inserted:—

The Committee divided: Ayes 189, Noes 208.

Division No. 14.]
AYES
[10.42 p.m.


Agnew, Commander Sir Peter
Dalkeith, Earl of
Iremonger, T. L.


Alison, Michael (Barkston Ash)
Dance, James
Irvine, Bryant Godman (Rye)


Allason, James (Hemel Hempstead)
Davies, Dr. Wyndham (Perry Barr)
Jennings, J. C.


Anstruther-Gray, Rt. Hn. Sir W.
d'Avigdor-Goldsmid, Sir Henry
Johnston, Russell (Inverness)


Astor, John
Dean, Paul
Jones, Rt. Hn. Aubrey (Hall Green)


Atkins, Humphrey
Digby, Simon Wingfield
Jopling, Michael


Awdry, Daniel
Dodds-Parker, Douglas
Kerr, Sir Hamilton (Cambridge)


Baker, W. H. K.
Donaldson, Cmdr. C. E. M.
Kershaw, Anthony


Balniel, Lord
Doughty, Charles
Kilfedder, James A.


Barlow, Sir John
Drayson, G. B.
Kimball, Marcus


Batsford, Brian
du Cann, Edward
King, Evelyn (Dorset, S.)


Beamish, Col. Sir Tufton
Eden, Sir John
Kitson, Timothy


Berkeley, Humphry
Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Lambton, Viscount


Berry, Hn. Anthony
Emmet, Hn. Mrs. Evelyn
Legge-Bourke, Sir Harry


Bessell, Peter
Fell, Anthony
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)


Biffen, John
Fletcher-Cooke, Charles Darwen)
Lloyd, Ian (P'tsm'th, Langstone)


Biggs-Davison, John
Fletcher-Cooke, Sir John (S'pton)
Lloyd, Rt. Hn. Selwyn (Wirral)


Bingham, R. M.
Forrest, George
Longbottom, Charles


Birch, Rt. Hn. Nigel
Foster, Sir John
Lubbock, Eric


Black, Sir Cyril
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
Lucas-Tooth, Sir Hugh


Bowen, Roderic (Cardigan)
Gardner, Edward
Mackie, George Y. (C'ness &amp; S'land)


Box, Donald
Gibson-Watt, David
McLaren, Martin


Boyd-Carpenter, Rt. Hn. J.
Gilmour, Sir John (East Fife)
MacIeod, Rt. Hn. Iain


Boyle, Rt. Hn. Sir Edward
Glover, Sir Douglas
McMaster, Stanley


Brewis, John
Gower, Raymond
McNair-Wilson, Patrick


Brinton, Sir Tatton
Grant, Anthony
Marten, Neil


Brooke, Rt. Hn. Henry
Grieve, Percy
Maude, Angus E. U.


Brown, Sir Edward (Bath)
Griffiths, Eldon (Bury St. Edmunds)
Maudling, Rt. Hn. Reginald


Bruce-Gardyne, J.
Griffiths, Peter (Smethwick)
Mawby, Ray


Buchanan-Smith, Alick
Grimond, Rt. Hn. J.
Maxwell-Hyslop, R. J.


Buck, Antony
Hall, John (Wycombe)
Maydon, Lt.-Cmdr. S. L. C.


Carlisle, Mark
Hall-Davis, A. G. F.
Meyer, Sir Anthony


Chataway, Christopher
Hamilton, Marquess of (Fermanagh)
Mills, Stratton (Belfast, N.)


Chichester-Clark, R.
Harris, Frederic (Croydon, N.W.)
Miscampbell, Norman


Clark, William (Nottingham, S.)
Harris, Reader (Heston)
Mitchell, David


Clarke, Brig. Terence (Portsmth, W.)
Harrison, Col. Sir Harwood (Eye)
Monro, Hector


Cole, Norman
Hastings, Stephen
More, Jasper


Cooke, Robert
Hawkins, Paul
Morgan, W. G.


Cooper-Key, Sir Neill
Hay, John
Morrison, Charles (Devizes)


Courtney, Cdr. Anthony
Heald, Rt. Hn. Sir Lionel
Morrison, John (Salisbury)


Craddock, Sir Beresford (Spelthorne)
Higgins, Terence L.
Mott-Radclyffe, Sir Charles


Crawley, Aidan
Hill, J. E. B. (S. Norfolk)
Murton, Oscar


Crosthwaite-Eyre, Col. Sir Oliver
Hirst, Geoffrey
Nicholson, Sir Godfrey


Crowder, F. P.
Hornsby, Richard
Noble, Rt. Hn. Michael


Cunningham, Sir Knox
Hornsby-Smith, Rt. Hn. Dame P.
Nugent, Rt. Hn. Sir Richard


Curran, Charles
Howe, Geoffrey (Bebington)
Orr, Capt. L. P. S.


Currie, G. B. H.
Hunt, John (Bromley)
Osborn, John (Hallam)



Hutchison, Michael Clark





Page, John (Harrow, W.)
Sinclair, Sir George
Walker, Peter (Worcester)


Page, R. Graham (Crosby)
Smith, Dudley (Br'ntf'd &amp; Chiswick)
Walker-Smith, Rt. Hn. Sir Derek


Percival, Ian
Stainton, Keith
Walters, Dennis


Peyton, John
Talbot, John E.
Ward, Dame Irene


Pickthorn, Sir Kenneth
Taylor, Edward M. (G'gow, Cathcart)
Weatherill, Bernard


Pitt, Dame Edith
Taylor, Frank (Moss Side)
Whitelaw, William


Powell, Rt. Hn. J. Enoch
Temple, John M.
Wilson, Geoffrey (Truro)


Prior, J. M. L.
Thompson, Sir Richard (Croydon, S.)
Wise, A. R.


Pym, Francis
Thorpe, Jeremy
Wolrige-Gordon, Patrick


Rawlinson, Rt. Hn. Sir Peter
Tiley, Arthur (Bradford, W.)
Wood, Rt. Hn. Richard


Redmayne, Rt. Hn. Martin
Tilney, John (Wavertree)
Woodnutt, Mark


Roberts, Sir Peter (Heeley)
Turton, Rt. Hn. R. H.
Wylie, N. R.


Roots, William
Tweedsmuir, Lady
Yates, William (The Wrekin)


Russell, Sir Ronald
Van Straubenzee, W. R.



Scott-Hopkins, James
Vaughan-Morgan, Rt. Hn. Sir John
TELLERS FOR THE AYES:


Sharples, Richard
Vickers, Miss Joan
Mr. MacArthur and Mr. Ian Fraser.


Shepherd, William
Walder, David (High Peak)





NOES


Albu, Austen
Foley, Maurice
Mendelson, J. J.


Allaun, Frank (Salford, E.)
Foot, Michael (Ebbw Vale)
Mikardo, Ian


Alldritt, W. H.
Freeson, Reginald
Millan, Bruce


Allen, Scholefield (Crewe)
Galpern, Sir Myer
Miller, Dr. M. S.


Armstrong, Ernest
Garrett, W. E.
Morris, Alfred (Wythenshawe)


Atkinson, Norman
Garrow, A.
Morris, Charles (Openshaw)


Bacon, Miss Alice
Ginsburg, David
Morris, John (Aberavon)


Bagier, Gordon A. T.
Gourlay, Harry
Murray, Albert


Barnett, Joel
Gregory, Arnold
Neal, Harold


Beaney, Alan
Hale, Leslie
Newens, Stan


Bellenger, Rt. Hn. F. J.
Hamilton, James (Bothwell)
Noel-Baker, Francis (Swindon)


Bence, Cyril
Hamling, William (Woolwich, W.)
Norwood, Christopher


Bennett, J. (Glasgow, Bridgeton)
Harper, Joseph
Oakes, Gordon


Binns, John
Harrison, Walter (Wakefield)
Oram, Albert E. (E. Ham, S.)


Bishop, E. S.
Hart, Mrs. Judith
Orbach, Maurice


Blackburn, F.
Hayman, F. H.
Orme, Stanley


Boardman, H.
Hazell, Bert
Oswald, Thomas


Boston, T. G.
Herbison, Rt. Hn. Margaret
Page Derek (King's Lynn)


Bowden, Rt. Hn. H. W. (Leics S. W.)
Hobden, Dennis (Brighton, K' town)
Palmer, Arthur


Boyden, James
Holman, Percy
Pannell, Rt. Hn. Charles


Braddock, Mrs. E. M.
Horner, John
Pargiter, G. A.


Bradley, Tom
Houghton, Rt. Hn. Douglas
Park, Trevor (Derbyshire, S. E.)


Broughton, Dr. A. D. D.
Howell, Denis (Small Heath)
Pavitt, Laurence


Brown, Hugh D. (Glasgow, Provan)
Howie, W.
Pentland, Norman


Buchan, Norman (Renfrewshire, W.)
Hoy, James
Perry, E. G.


Callaghan, Rt. Hn. James
Hughes, Emrys (S. Ayrshire)
Prentice, R. E.


Carmichael, Neil
Hunter, Adam (Dunfermline)
Probert, Arthur


Carter-Jones, Lewis
Hunter, A. E. (Feltham)
Redhead, Edward


Castle, Rt. Hn. Barbara
Irvine, A. J. (Edge Hill)
Rees, Merlyn


Coleman, Donald
Irving, Sydney (Dartford)
Rhodes, Geoffrey


Conlan, Bernard
Janner, Sir Barnett
Richard, Ivor


Craddock, George (Bradford, S.)
Jenkins, Hugh (Putney)
Roberts, Albert (Normanton)


Crawshaw, Richard
Jones, Dan (Burnley)
Robertson, John (Paisley)


Cullen, Mrs. Alice
Jones, J. Idwal (Wrexham)
Rodgers, William (Stockton)


Dalyell, Tam
Jones, T. W. (Wrexham)
Rogers, George (Kensington, N.)


Davies, G. Elfed (Rhondda, E.)
Kelley, Richard
Rose, Paul B.


Davies, Harold (Leek)
Kenyon, Clifford
Ross, Rt. Hn. William


Davies, Ifor (Gower)
Kerr, Mrs. Anne (R'ter &amp; Chatham)
Rowland, Christopher


Davies, S. O. (Merthyr)
Kerr, Dr. David (W'worth, Central)
Sheldon, Robert


de Freitas, Sir Geoffrey
Lawson, George
Shore, Peter (Stepney)


Delargy, Hugh
Leadbitter, Ted
Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)


Dempsey, James
Lee, Miss Jennie (Cannock)
Short, Mrs. Renèe (W'hampton, N. E.)


Diamond, John
Lever, Harold (Cheetham)
Silkin, John (Deptford)


Dodds, Norman
Lewis, Arthur (West Ham, N.)
Silkin, S. C. (Camberwell, Dulwich)


Doig, Peter
Lewis, Ron (Carlisle)
Silverman, Julius (Aston)


Donnelly, Desmond
Lomas, Kenneth
Silverman, Sydney (Nelson)


Duffy, Dr. A. E. P.
Loughlin, Charles
Slater Mrs. Harriet (Stoke, N.)


Dunn, James A.
Mabon, Dr. J. Dickson
Slater, Joseph (Sedgefield)


Dunnett, Jack
McBride, Neil
Small, William


Edelman, Maurice
McCann, J.
Solomons, Henry


Edwards, Rt. Hn. Ness (Caerphilly)
MacDermot, Niall
Soskice, Rt. Hn. Sir Frank


Edwards, Robert (Bilston)
McGuire, Michael
Spriggs, Leslie


English, Michael
McKay, Mrs. Margaret
Stones, William


Ennals, David
MacKenzie, Gregor (Rutherglen)
Stross, Sir Barnett (Stoke-on-Trent, C.)


Ensor, David
Mackie, John (Enfield, E.)
Swain, Thomas


Evans, Albert (Islington, S. W.)
MacMillan, Malcolm
Symonds, J. B.


Fernyhough, E.
Mahon, Peter (Preston, S.)
Taverne, Dick


Finch, Harold (Bedwelty)
Mahon, Simon (Bootle)
Taylor, Bernard (Mansfield)


Fitch, Alan (Wigan)
Mallalieu, E. L. (Brigg)
Thomas, George (Cardiff, W.)


Fletcher, Sir Eric (Islington, E.)
Mallalleu, J. P. W. (Huddersfield, E.)
Thomas, Iorwerth (Rhondda, W.)


Fletcher, Ted (Darlington)
Manuel, Archie
Tinn, James


Fletcher, Raymond (Ilkeston)
Mapp, Charles
Urwin, T. W.


Floud, Bernard
Mason, Roy
Varley, Eric G.







Wainwright, Edwin
Wells, William (Walsall, N.)
Wilson, William (Coventry, S.)


Walden, Brian (All Saints)
Wilkins, W. A.
Winterbottom, R. E.


Walker, Harold (Doncaster)
Willey, Rt. Hn. Frederick
Woodburn, Rt. Hn. A.


Wallace, George
Williams, Alan (Swansea, W.)
Woof, Robert


Warbey, William
Williams, Mrs. S. V. T. B. (Hitchin)
Wyatt, Woodrow


Watkins, Tudor
Williams, W. T. (Warrington)



Weitzman, David
Willis, E. G. (Edinburgh, E.)
TELLERS FOR THE NOES:




Mr. Whitlock and Mr. Grey.

The Chairman: I think that it would be for the convenience of the Committee if we take with the next Amendment Amendment No. 7, in the name of the hon. and gallant Gentleman the Member for Wells (Lieut.-Commander Maydon).

Lieut.-Commander Maydon: I beg to move, Amendment No. 6, in page 2, line 6, at end to insert:
Provided that the rate of the duty shall remain at two shillings and ninepence a gallon for hydrocarbon oils used for the propulsion of cars and other vehicles driven by disabled persons.
The reason for these two slightly differing Amendments is as follows. This Amendment seeks abatement of the new petrol or fuel tax for vehicles driven by disabled people, irrespective of the source of supply of the vehicle. It would apply to fuel used in a vehicle while it is driven by a disabled person. The vehicle need not necessarily belong to or be allocated to such a person. The sole qualification would be disablement, even to a minor degree.
This would be the ideal, covering this broad and deserving category of people. I acknowledge that it would be difficult to administer and police this concession and to protect the Excise against abuse, but, on the other hand, it would have the merit of being completely fair as between one disabled person and another.
The second Amendment is drawn more narrowly because of the difficulties which I have just explained. It is restricted to those disabled who have been provided with a motor vehicle by the Ministry of Health, either motor cars or motor tricycles. It would exclude a large number of disabled people whose injury was not sufficient to qualify them for a Ministry of Health vehicle, but who find vehicles such a boon in their restricted activities. It would also exclude about 400 severely disabled war pensioners who already receive Ministry of Health grants to adapt their own cars.
It would include 4,250 war pensioners with Ministry of Health motor cars, and also about 500 war pensioners with Ministry of Health tricycles. In addition, it would include 14,300 disabled people, not war pensioners, or possibly a slightly lesser number than that, allowing for some of those people being supplied with

electrical as opposed to hydrocarbon fuel driven tricycles.
Some years ago the Ministry accepted that a disabled person probably did an average of about 7,000 miles a year. At a very rough estimate of 50 miles to the gallon—which would be a very small engine, the small capacity engine of the motor tricycle, and that is taken into account—that is the equivalent of 140 gallons per year, and at 6d. extra tax on fuel that comes to £3 10s. in the year. Thus, it is not a very large sum of money which we are disputing here tonight.
There is a respectable precedent for this concession. Some disabled persons at present receive, included in their annual maintenance allowance, a grant to compensate them for the last increase, or one of the last increases, in fuel tax for motorised tricycles, which amounts to £3 per annum for each disabled person.
I fully recognise that the Chancellor of the Exchequer probably could not accept such a wide Amendment as my first proposal, but the second is narrower, and, as I have explained, excludes a large number of deserving disabled people, so I hope that he will make a choice somewhere between the two and make a concession to this very deserving class of people.

Mr. Charles Curran: I rise to support the Amendment. I do not want to repeat in detail the arguments used by my hon. and gallant Friend the Member for Wells (Lieut.-Commander Maydon). I want to direct the attention of the Committee to a question of principle, namely, what should be our tax policy when dealing with citizens with physical disabilities? The answer, I suggest, is that when a citizen incurs additional expense by reason of his disability, that additional expense should be taken into account when assessing his liability to tax.
To some extent we do that already. We take physical disability into account when assessing a citizen's liability to direct taxation. To some extent we take it into account when assessing his liability to indirect taxation. What we are asking the Treasury to do now is to maintain the concessions which have hitherto been made, and not to allow them to be eroded by an increase in the petrol tax.
We could, I think, go further, and I should like to know what the Treasury thinks about this matter. We could say that we will give all disabled citizens the concessions which we now give some disabled citizens in respect of petrol tax. We could give this concession to every disabled driver who has been accepted by his local authority and issued with a disabled driver's badge. These badges are issued following an examination by local medical officers of health. This would ensure uniformity of treatment.
If the Treasury is not prepared to go as far as that, I should like to know why. It seems to me that, simply as a matter of principle, there is a strong case for saying that we should extend the concession which we have already given to people who, by reason of their disability, are required to incur additional expense. We should extend that principle to all persons who suffer from a disability to the extent that they are obliged to use motor transport to overcome their disability. If the Government are not prepared to go as far as this, I hope that they will give us the reasons why. In that event, I hope that they will be prepared to accept the second Amendment, and thereby ensure that the increase in the petrol tax does not place an additional burden upon all disabled people.

11.0 p.m.

Mr. John Page: I support what my hon. and gallant Friend said in moving the Amendment. We are dealing with two categories here—the war disabled and the disabled person who receives his vehicle from the National Health Service—and the 14 gallons free issue of petrol each year. We must see that that concession is not eroded. This is an opportunity for us to be a little generous with this category of people.
I feel that the Chancellor should also seriously consider widening the scope of the National Health free grant of petrol to the 2,000 disabled drivers who have elected to use their own cars rather than the single-seater tricycles. It makes a very great difference to a disabled person if he is able to have someone accompanying him to his work, and people who are trying so desperately and so successfully to help themselves should receive this extra help from us.
This is not a difficult concession to make. The garages from which the petrol

must be drawn are designated. If the amount were to be increased to 40 or 50 gallons a year there would be no difficulty. The machinery is available. Nothing new will have to be started. I see no difficulties in connection with getting round the use of special petrol, or getting petrol at a cheaper price. The machinery exists. I hope that hon. Members opposite will support my hon. Friends and see that this concession is made to this most worthy group of people.

Sir Peter Roberts: I want to raise a point in connection with the human aspect of this problem. I have a constituent for whom we had the greatest difficulty in getting one of these vehicles. He can only just afford to run it. If we impose a duty even of only £3 or £4 a year it might prevent some people from being able to get about as they do at the moment. I cannot believe that the cost would be very great. I listened to my hon. and gallant Friend moving the Amendment. I cannot believe that it is the Government's intention to use this tax to prevent 5,000, 6,000 or 7,000 people—each of whom will otherwise pay about £3 10s. extra a year under this provision—from getting the recreation which they now so much enjoy.

Mr. Diamond: I am sure that the Committee will agree with me that these Amendments have been put forward extremely fairly, very persuasively, and, to everybody's satisfaction, extremely shortly, too, for which I and all of us are grateful.
There are two Amendments, and the hon. and gallant Gentleman the Member for Wells (Lieut.-Colonel Maydon) drew attention to the fact that the first was, as he put it, not workable, but that there were many more arguments which could be put forward in favour of the second. I wonder, therefore, if I could deal with the second one first, that is to say, the reduction in duty so far as motor vehicles provided by the Ministry of Health is concerned.
There are no administrative problems here at all. There is none for the simple reason that the provision here is made by the Ministry of Health; it is not and has not been found either possible or necessary to do it through the machinery of a reduction in duty in a Finance Bill.


It is made by the Minister of Health, who has adequate powers from the House already to do whatever is necessary.
I cannot say specifically what decision my right hon. Friend will reach. All I can say is that this matter is being considered. The arguments are powerful, and I recognise that there is considerable hope on the part of many right hon. and hon. Gentlemen that they will be found to be persuasive by my right hon. Friend. But I cannot go further than saying that consideration is being given to them, and that my right hon. Friend, as soon as he has finished going into the various technical points concerned, hopes to be able to reach a decision at most in two or three weeks—no more than that.
It is not possible for me—with the greatest sympathy and understanding of the problem—to give a decision on his behalf tonight. I hope that the hon. and gallant Gentleman and all who are interested in this matter—as I am sure the whole Committee is—understand the position about Ministry of Health cars.
The other Amendment is one which I must ask the Committee to reject, because it just is not workable, has never been found to be workable, and it widens the situation in a way which would be invidious in the extreme. It is not workable because, as I pointed out during discussion of a previous amendment, duty is collected from the bonded warehouses at the time the petrol is issued, and there are no practical means of ensuring that the duty on the petrol goes for the purposes which the movers of the amendment want it to be used for.
Furthermore, there is this real difficulty—and I hope that I will not be misunderstood here—that if one is talking about disabled persons, whom we all want to help, and whose human problems we all understand, and one brings in the question of degree, one is bringing in a very wide class, but excluding people who are suffering equal hardship, though not disability. One is excluding a whole group of people who have no means at all of getting any benefit, and who it would be difficult to say, on grounds of common sense or humanity, should be differently treated.
We have already received representations on behalf of country dwellers, workers in places remote from public transport, old-age pensioners, impoverished clergymen and others; I do not put them all in the same category. I ask the Committee to be good enough to bear in mind that the person suffering from a minor disability, by pure definition, is entitled, under this Amendment, to the benefit of the Amendment, and yet is in no worse a position than many other categories who would be excluded.
Having regard to the practical impossibility of dealing with the relief, which is in everybody's minds, in the way proposed here—the impossibility which has been apparent to earlier Administrations and is being confirmed by the present one—and having regard to the fact that my right hon. Friend the Minister of Health is at the moment considering the technical problems involved in helping the main group which is covered by the second Amendment, and hopes to be able to reach a conclusion in two or three weeks, I hope that it will be unnecessary to press either of these Amendments to a Division.

Mr. Richard Wood: The hon. Gentleman has given us his views on the two Amendments. He has pointed out that the first of them is subject to certain difficulties, which I am sure my hon. and gallant Friend the Member for Wells (Lieut.-Commander Maydon) is only too ready to recognise. I myself felt that he might possibly go a little further than he did, on the lines suggested by my hon. Friend the Member for Uxbridge (Mr. Curran).
If disabled drivers can be identified for the purposes for which we know they are identified, I should have thought it possible to identify disabled drivers for these purposes, too. I, and no doubt a number of my hon. Friends, are a little disappointed that we did not receive from the hon. Gentleman the undertaking for which we asked. He explained that his right hon. Friend had the power to make concessions in the direction that we would like, but he did not go so far as to give us a definite undertaking that he would make those concessions. While we realise that he has the power and that he is considering the matter, I am doubtful


whether my hon. Friends will be sufficiently satisfied with the undertaking that he has given.
We should like to press the hon. Gentleman to give us a definite undertaking that his right hon. Friend will not only look at this point, but will accept the principle of the Amendment and embody it in the action which he has power to take.

Lieut.-Commander Maydon: Could the Chief Secretary give an assurance that at the same time as this examination is made of the general case stated in the second Amendment he will look at the particular case of the 400 or so war-disabled pensioners who, with grant, have adapted their own cars? That should be a fairly easy addition, and a fairly easily designated addition, to the category of people whom he has accepted for consideration. If he can give us that assurance, I will willingly withdraw the Amendment.

Mr. Diamond: I want to make it quite clear, in response to the right hon. Member for Bridlington (Mr. Wood) that I cannot do more than I have said. I am sure that he, from his long experience in government, knows that very well.
The hon. and gallant Member for Wells (Lieut.-Commander Maydon) has asked whether, if this Amendment were withdrawn, consideration would be given to the points that he has put forward, particularly the one that he has just mentioned, by my right hon. Friend the Minister of Health. I have been asked to give an undertaking that consideration would be given. I give that undertaking unhesitatingly, that consideration will be given. Indeed, I shall draw my right hon. Friend's attention to the whole of this debate.
There is no difference between either side of the Committee as to what it would be desirable to do if it were possible to do all these things, but I want to make it absolutely clear to the right hon. Gentleman that I cannot go further than say what I have said. Consideration is going on. A decision has not been reached, and I certainly cannot say on behalf of a right hon. Gentleman who has not yet reached a decision that a decision has been reached.
If I may suggest it to the Committee. I think that the best way of assisting in the matter is not to have a Division. By far the best way, if I may humbly suggest it, of achieving what hon. Members opposite want to achieve would be for the Amendment to be withdrawn.

Mr. Wood: I must press the hon. Gentleman once more. While we accept that he cannot speak for his right hon. Friend in this matter and he cannot give us the final decision that his right hon. Friend will reach, we are anxious to make sure that his right hon. Friend will not only give consideration to this matter. We know that he has the power to act and to embody our Amendment in whatever form is available to him, and we must press the hon. Gentleman for an undertaking that his right hon. Friend will exercise the powers he has in this direction towards giving effect to the Amendment.

11.15 p.m.

Mr. Diamond: I have listened carefully to the right hon. Member for Bridlington (Mr. Wood) and I can only repeat that a decision has not been reached. I do not propose to use words which fog that issue. A decision has not been reached and, that being the case, I cannot say that one has been reached. I can say, however, that consideration of this issue started long before the Amendment was tabled. Thus, it is not a question of consideration being given in the future because consideration of it has been taking place. I am speaking of consideration which was not prompted by the Amendment. I can only leave it to hon. Members opposite to decide, for I cannot, on behalf of my right hon. Friend, give a decision which has not yet been reached.

Mr. R. H. Turton: The Committee is placed in a rather impossible position. The Chief Secretary is speaking for the Government. We understand that he cannot commit his right hon. Friend, but can he assure us that a decision will be reached before the conclusion of the Committee stage? Alternatively, if he could give an assurance that a decision will be reached before Report, I feel sure that my hon. and gallant Friend the Member for Wells (Lieut.-Commander Maydon) will withdraw the Amendment.


We would then have an opportunity, if a satisfactory decision were not reached, to raise the matter on Report.

Mr. Diamond: No, Sir. I am sorry. The hon. and gallant Member for Wells (Lieut.-Commander Maydon) must make his own decision. I will merely reply to the question asked by the right hon. Member for Thirsk and Malton (Mr. Turton) by saying that, having regard to the likely date of the Report stage and in view of the statements I have made. I regret that my answer must be "No," because there is no likelihood that a decision will be reached within that short time.

Sir H. d'Avigdor-Goldsmid: It is disappointing to see how a change of scenery has changed hon. Members opposite. The Chief Secretary will remember—as will his colleagues the Chancellor of the Duchy of Lancaster and the Parliamentary Secretary to the Ministry of Health—how they pressed hard for a number of excellent causes with great determination and how, on many occasions, they refused to be fobbed off with the sort of answer being tendered tonight.
There has been an agreeable and pleasant atmosphere in the Committee throughout the day and I cannot understand why, on this point, the Chief Secretary, who is fully qualified to deal with this matter, will not really deal with it If he were to say to his right hon. Friend, "On the financial side of this, we will see you through," his right hon. Friend would probably find it easy to come to a decision.
This is clearly a matter for decision by the Treasury. It is disappointing to see the Treasury representatives here, together with the Chancellor of the Duchy of Lancaster, who supervises all this work, and yet the Chief Secretary, who is well qualified to give the sort of undertaking we seek, will not give us this undertaking.
After hearing all this rather regrettable equivocation, I think that if the hon. Gentleman does not give a decision it is because he does not want to and not because he cannot. I very much regret that we are faced with what amounts to blackmail, that if we vote against the Government on this Amendment it will prejudice the matter. This concession

is something which hon. Members on both sides of the Committee want to be given. Why should he threaten the Opposition in this way when the only means at our disposal is to vote? I do not believe that he has changed so much. Why should he refuse something which I believe he would like to do?

Sir D. Glover: The Chancellor of the Duchy of Lancaster said the other day on another matter of social legislation that the bankers of Zurich did not like it and it had to be withdrawn. This is money provided by the Treasury; can he not get the Committee out of its difficulty?

Mr. Hirst: I rise only for a moment to give the Government a chance to think this matter out a little more. I have had a little experience of this kind of thing on both sides of the Committee. There are occasions when it is fortunate if someone speaks for a little time to give the Government time to consider. I know the mind of hon. and right hon. Members opposite on this matter. I have listened for hour after hour to their views on it and I believe that they would like to do something on the lines of these Amendments.
The Amendment we are discussing was the first put down for Committee. There has been such time to consider it as the Government gave. If there has not been a great deal of time for that it is because they have pressed on to Committee so rapidly after Second Reading. That is not our fault, but theirs. If the Report stage is to come quickly that, also, is their fault. Disabled people and others should not suffer on that account nor should the Opposition, in their duty towards them, suffer on that account.
I sincerely hope that these few words, which are sincerely felt because this is a deplorable situation, have given the hon. Gentleman a little more understanding of the feeling of the Committee so that he will adopt a more humane approach to the subject.

Mr. Maudling: I am sorry that the Chief Secretary did not respond to the suggestion of my right hon. Friend the Member for Bridlington (Mr. Wood), which seemed a reasonable one. We feel it important not to part with the Bill until there has been a decision on this matter. As, apparently, we are not to


be given an undertaking between now and Report, we must register our views at this stage, because our views must, if possible, prevail.

Question put, That those words be there inserted:—

The Committee divided: Ayes 169, Noes 197.

Division No. 15.]
AYES
[11.23 p.m.


Agnew, Commander Sir Peter
Fell, Anthony
Maydon, Lt.-Cmdr. S. L. C.


Alison, Michael (Barkston Ash)
Fletcher-Cooke, Charles (Darwen)
Meyer, Sir Anthony


Allason, James (Hemel Hempstead)
Fletcher-Cooke, Sir John (S'pton)
Mills, Stratton (Belfast, N.)


Anstruther-Gray, Rt. Hn. Sir W.
Forrest, George
Miscampbell, Norman


Astor, John
Foster, Sir John
Mitchell, David


Atkins, Humphrey
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
Monro, Hector


Awdry, Daniel
Fraser, Ian (Plymouth, Sutton)
More, Jasper


Baker, W. H. K.
Gardner, Edward
Morgan, W. G.


Balniel, Lord
Gibson-Watt, David
Morrison, Charles (Devizes)


Barlow, Sir John
Gilmour, Sir John (East Fife)
Mott-Radclyffe, Sir Charles


Batsford, Brian
Glover, Sir Douglas
Murton, Oscar


Beamish, Col. Sir Tufton
Gower, Raymond
Nicholson, Sir Godfrey


Berkeley, Humphry
Grant, Anthony
Noble, Rt. Hn. Michael


Berry, Hn. Anthony
Grieve, Percy
Nugent, Rt. Hn. Sir Richard


Bessell, Peter
Griffiths, Peter (Smethwick)
Orr, Capt. L. P. S.


Biffen, John
Grimond, Rt. Hn. J.
Osborn, John (Hallam)


Biggs-Davison, John
Hall, John (Wycombe)
Page, John (Harrow, W.)


Bingham, R. M.
Hall-Davis, A. G. F.
Page, R. Graham (Crosby)


Bowen, Roderic (Cardigan)
Hamilton, Marquess of (Fermanagh)
Percival, Ian


Box, Donald
Harris, Reader (Heston)
Peyton, John


Boyd-Carpenter, Rt. Hn. J.
Harrison, Col. Sir Harwood (Eye)
Pickthorn, Sir Kenneth


Boyle, Rt. Hn. Sir Edward
Hastings, Stephen
Pitt, Dame Edith


Brewis, John
Hawkins, Paul
Powell, Rt. Hn. J. Enoch


Brinton, Sir Tatton
Hay, John
Prior, J. M. L.


Brooke, Rt. Hn. Henry
Heald, Rt. Hn. Sir Lionel
Rawlinson, Rt. Hn. Sir Peter


Brown, Sir Edward (Bath)
Higgins, Terence L.
Redmayne, Rt. Hn. Martin


Bruce-Gardyne, J.
Hill, J. E. B. (S. Norfolk)
Roberts, Sir Peter (Heeley)


Buchanan-Smith, Alick
Hirst, Geoffrey
Russell, Sir Ronald


Buck, Antony
Hornby, Richard
Scott-Hopkins, James


Carlisle, Mark
Hornsby-Smith, Rt. Hn. Dame P.
Sharples, Richard


Chataway, Christopher
Howe, Geoffrey (Bebington)
Shepherd, William


Chichester-Clark, R.
Hunt, John (Bromley)
Sinclair, Sir George


Clark, William (Nottingham, S.)
Hutchison, Michael Clark
Smith, Dudley (Br'ntf'rd &amp; Chiswick)


Clarke, Brig. Terence (Portsmth, W.)
Irvine, Bryant Godman (Rye)
Stainton, Keith


Cole, Norman
Johnston, Russell (Inverness)
Taylor, Edward M. (G'gow, Cathcart)


Cooke, Robert
Jones, Rt. Hn. Aubrey (Hall Green)
Taylor, Frank (Moss Side)


Cooper-Key, Sir Neill
Jopling, Michael
Temple, John M.


Courtney, Cdr. Anthony
Kerr, Sir Hamilton (Cambridge)
Thompson, Sir Richard (Croydon, S.)


Craddock, Sir Beresford (Spelthorne)
Kilfedder, James A.
Thorpe, Jeremy


Crawley, Aidan
Kimball, Marcus
Tiley, Arthur (Bradford, W.)


Crosthwaite-Eyre, Col. Sir Oliver
King, Evelyn (Dorset, S.)
Turton, Rt. Hn. R. H


Crowder, F. P.
Kitson, Timothy
Van Straubenzee, W. R.


Cunningham, Sir Knox
Lambton, Viscount
Vaughan-Morgan, Rt. Hn. Sir John


Curran, Charles
Legge-Bourke, Sir Harry
Vickers, Miss Joan


Currie, G. B. H.
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Walker-Smith, Rt. Hn. Sir Derek


Dalkeith, Earl of
Lloyd, Ian (P'tsm'th, Langstone)
Walters, Dennis


Dance, James
Lloyd, Rt. Hn. Selwyn (Wirral)
Ward, Dame Irene


d'Avigdor-Goldsmid, Sir Henry
Longbottom, Charles
Weatherill, Bernard


Dean, Paul
Lubbock, Eric
Whitelaw, William


Digby, Simon Wingfield
Lucas-Tooth, Sir Hugh
Wilson, Geoffrey (Truro)


Dodds-Parker, Douglas
MacArthur, Ian
Wise, A. R.


Donaldson, Cmdr. C. E. M.
Mackie, George Y. (C'ness &amp; S'land)
Wolrige-Gordon, Patrick


Doughty, Charles
McMaster, Stanley
Wood, Rt. Hn. Richard


Drayson, G. B.
McNair-Wilson, Patrick
Woodnutt, Mark


du Cann, Edward
Marten, Neil
Wylie, N. R.


Eden, Sir John
Maude, Angus E. U.



Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Maudling, Rt. Hn. Reginald
TELLERS FOR THE AYES:




Mr. McLaren and Mr. Pym.




NOES


Albu, Austen
Boston, T. G.
Conlan, Bernard


Alldritt, W. H.
Bowden, Rt. Hn. H. W. (Leics S. W.)
Craddock, George (Bradford, S.)


Allen, Scholefield (Crewe)
Boyden, James
Crawshaw, Richard


Armstrong, Ernest
Braddock, Mrs. E. M.
Cullen, Mrs. Alice


Atkinson, Norman
Bradley, Tom
Dalyell, Tam


Bacon, Miss Alice
Broughton, Dr. A. D. D.
Davies, G. Elfed (Rhondda, E.)


Bagier, Gordon A. T.
Brown, Rt. Hn. George (Belper)
Davies, Harold (Leek)


Barnett, Joel
Brown, Hugh D. (Glasgow, Provan)
Delargy, Hugh


Bellenger, Rt. Hn. F. J.
Buchan, Norman (Renfrewshire, W.)
Dempsey, James


Bennett, J. (Glasgow, Bridgeton)
Callaghan, Rt. Hn. James
Diamond, John


Binns, John
Carmichael, Neil
Dodds, Norman


Bishop, E. S.
Carter-Jones, Lewis
Doig, Peter


Blackburn, F.
Castle, Rt. Hn. Barbara
Donnelly, Desmond


Boardman, H.
Coleman, Donald
Duffy, Dr. A. E. P.




Dunn, James A.
Kerr, Dr. David (W'worth, Central)
Richard, Ivor


Dunnett, Jack
Lawson, George
Roberts, Albert (Normanton)


Edelman, Maurice
Leadbitter, Ted
Robertson, John (Paisley)


Edwards, Rt. Hn. Ness (Caerphilly)
Lever, Harold (Cheetham)
Rodgers, William (Stockton)


Edwards, Robert (Bilston)
Lewis, Arthur (West Ham, N.)
Rose, Paul B.


English, Michael
Lewis, Ron (Carlisle)
Ross, Rt. Hn. William


Ennals, David
Lomas, Kenneth
Rowland, Christopher


Ensor, David
Mabon, Dr. J. Dickson
Sheldon, Robert


Evans, Albert (Islington, S. W.)
McBride, Neil
Shore, Peter (Stepney)


Fernyhough, E.
McCann, J.
Short, Rt. Hn. E. (N'castle-on-Tyne, C.)


Finch, Harold (Bedwelty)
MacDermot, Niall
Short, Mrs. Renèe (W'hampton, N. E.)


Fitch, Alan (Wigan)
McGuire, Michael
Silkin, John (Deptford)


Fletcher, Sir Eric (Islington, E.)
McKay, Mrs. Margaret
Silkin, S. C. (Camberwell, Dulwich)


Fletcher, Ted (Darlington)
MacKenzie, Gregor (Rutherglen)
Silverman, Julius (Aston)


Fletcher, Raymond (Ilkeston)
Mackie, John (Enfield, E.)
Silverman, Sydney (Nelson)


Floud, Bernard
MacMillan, Malcolm
Slater, Mrs. Harriet (Stoke, N.)


Foot, Michael (Ebbw Vale)
Mahon, Peter (Preston, S.)
Slater, Joseph (Sedgefield)


Freeson, Reginald
Mahon, Simon (Bootle)
Small, William


Galpern, Sir Myer
Mallalieu, E. L. (Brigg)
Solomons, Henry


Garrett, W. E.
Mallalieu, J. P. W. (Huddersfield, E.)
Spriggs, Leslie


Garrow, A.
Manuel, Archie
Stross, Sir Barnett (Stoke-on-Trent, C.)


Ginsburg, David
Mapp, Charles
Swain, Thomas


Gourlay, Harry
Mendelson, J. J.
Symonds, J. B.


Gregory, Arnold
Mikardo, Ian
Taverne, Dick


Grey, Charles
Millan, Bruce
Taylor, Bernard (Mansfield)


Hale, Leslie
Miller, Dr. M. S.
Thomas, George (Cardiff, W.)


Hamilton, James (Bothwell)
Morris, Alfred (Wythenshawe)
Thomas, Iorwerth (Rhondda, W.)


Hamling, William (Woolwich, W.)
Morris, Charles (Openshaw)
Tinn, James


Harper, Joseph
Morris, John (Aberavon)
Urwin, T. W.


Harrison, Walter (Wakefield)
Murray, Albert
Varley, Eric G.


Hart, Mrs. Judith
Neal, Harold
Wainwright, Edwin


Hayman, F. H.
Newens, Stan
Walden, Brian (All Saints)


Hazell, Bert
Noel-Baker, Francis (Swindon)
Walker, Harold (Doncaster)


Herbison, Rt. Hn. Margaret
Norwood, Christopher
Wallace, George


Hobden, Dennis (Brighton, K'town)
Oakes, Gordon
Warbey, William


Horner, John
Oram, Albert E. (E. Ham, S.)
Watkins, Tudor


Houghton, Rt. Hn. Douglas
Orbach, Maurice
Weitzman, David


Howell, Denis (Small Heath)
Orme, Stanley
Wells, William (Walsall, N.)


Howie, W.
Oswald, Thomas
Whitlock, William


Hoy, James
Page Derek (king's Lynn)
Wilkins, W. A.


Hughes, Emrys (S. Ayrshire)
Palmer, Arthur
Willey, Rt. Hn. Frcderick


Hunter, Adam (Dunfermline)
Pannell, Rt. Hn. Charles
Williams, Alan (Swansea, W.)


Hunter, A. E. (Feltham)
Pargiter, G. A.
Williams, Mrs. Shirley (Hitchin)


Irvine, A. J. (Edge Hill)
Park, Trevor (Derbyshire, S. E.)
Williams, W. T. (Warrington)


Irving, Sydney (Dartford)
Pavitt, Laurence
Willis, George (Edinburgh, E.)


Janner, Sir Barnett
Pentland, Norman
Wilson, William (Coventry, S.)


Jenkins, Hugh (Putney)
Perry, E. G.
Winterbottom, R. E.


Jones, Dan (Burnley)
Prentice, R. E.
Woodburn, Rt. Hn. A.


Jones, J. Idwal (Wrexham)
Probert, Arthur
Woof, Robert


Jones, T. W. (Merioneth)
Redhead, Edward
Wyatt, Woodrow


Kelley, Richard
Rees, Merlyn



Kenyon, Clifford
Rhodes, Geoffrey
TELLERS FOR THE NOES:


Kerr, Mrs. Anne (R'ter &amp; Chatham)

Mr. Rogers and Mr. Ifor Davies.

Mr. Callaghan: I beg to move, That the Chairman do report Progress and ask leave to sit again.
I do not know, Sir Samuel, whether you will think that much progress has been made, but I believe it to be very little. We have done two out of 25 pages of Amendments, but, being of a sanguine temperament, I assume that we shall probably make rather faster progress in the next two days. I certainly do not think that we want to have an all-night sitting tonight and I imagine that most hon. Gentlemen will share that view. This is probably a convenient time to adjourn.

Question put and agreed to.

Committee report Progress; to sit again Tomorrow.

Orders of the Day — RIVERS (PREVENTION OF POLLUTION) (SCOTLAND) BILL

Order for Second Reading read.

Motion made, and Question put (pursuant to Standing Order No. 62 (Public Bills relating exclusively to Scotland)), That the Bill be committed to the Scottish Standing Committee.—[Mr. Ross.]

Question agreed to.

Bill (deemed to have been read a Second time) committed to the Scottish Standing Committee.

Orders of the Day — RIVERS (PREVENTION OF POLLUTION) (SCOTLAND) [MONEY]

[Queen's Recommendation signified]

Considered in Committee under Standing Order No. 88 (Money Committees).

[DR. HORACE KING in the Chair]

Resolved,
That, for the purposes of any Act of the present Session to make further provision for maintaining or restoring the cleanliness of the rivers and other inland waters in Scotland, it is expedient to authorise the payment out of moneys provided by Parliament of any expenses incurred by the Secretary of State under that Act and of any increase attributable to the provisions of that Act in the sums so payable under any other enactment.—[Mr. Ross.]

Resolution to be reported.

Report to be received Tomorrow.

Orders of the Day — KITCHEN AND REFRESHMENT ROOMS (HOUSE OF COMMONS)

Select Committee be appointed to control the arrangements for the Kitchen and Refreshment Rooms in the Department of the Serjeant at Arms attending this House:

Mrs. Braddock, Mr. Burden, Mr. Tam Dalyell, Mr. Norman Dodds, Mr. David Griffiths, Mr. John Harvey, Mr. Godfrey Lagden, Mrs. Margaret McKay, Mr. Jasper More, Dame Edith Pitt, Mr. Harry Randall, Dr. Shirley Summerskill and Sir Gerald Wills:

Four to be the quorum:

Power to send for persons, papers and records; and to sit notwithstanding any adjournment of the House:

Power to appoint sub-committees and to delegate to such sub-committees any of the powers upon them conferred for controlling the arrangements for the Kitchen and Refreshment Rooms in the Department of the Serjeant at Arms attending this House:

Three to be the quorum of every such sub-committee:

Every such sub-committee have power to send for persons, papers and records; and to sit notwithstanding any adjournment of the House.—[Mr. George Rogers.]

Orders of the Day — PUBLICATIONS AND DEBATES REPORTS

Select Committee appointed to assist Mr. Speaker in arrangements for the re-

porting and publishing of Debates and in regard to the form and distribution of the Notice Papers issued in connection with the Business of the House; and to inquire into the expenditure on stationery and printing for the House and the public services generally:

Mr. Brian Batsford, Mr. R. Chichester-Clark, Mr. Tom Driberg, Mr. Maurice Edelman, Mr. Eldon Griffiths, Mr. Percy Holman, Mr. Godman Irvine, Mr. Robert Mathew, Mr. Ian Maxwell, Mr. Peter Shore, and Mr. Brian Walden.

Power to send for persons, papers and records:

Power to report from time to time:

Three to be the Quorum—[Mr. George Rogers.]

Orders of the Day — PUBLIC PETITIONS

Select Committee appointed to whom shall be referred all Petitions presented to the House, with the exception of such as are deposited in the Private Bill Office, and that such Committee do classify and prepare abstracts of the same in such form and manner as shall appear to them best suited to convey to the House all requisite information respecting their contents, and do report the same from time to time to the House; and that the Reports of the Committee do set forth, in respect of each Petition, the number of signatures which are accompanied by addresses, and which are written on sheets, headed in every case by the prayer of the Petition, or on the back of such sheets provided that on every sheet after the first the prayer may be reproduced in print or by other mechanical process; and that such Committee do have power to direct the printing in extenso of such Petitions, or of such parts of Petitions, as shall appear to require it:

Mr. Alldritt, Mr. Bernard Braine, Lieut.-Colonel Sir Walter Bromley-Davenport, Mr. David Griffiths, Mr. Forbes Hendry, Mr. Hector Hughes, Mr. J. C. Jennings, Mr. Godfrey Lagden, Colonel Lancaster, Sir Hugh Lucas-Tooth, Mr. Harold Neal, Mr. Pargiter, Mr. Leslie Spriggs, Mr. Tudor Watkins and Mr. Winterbottom.

Power to send for persons, papers and records:

Three to be the Quorum.—[Mr. George Rogers.]

Orders of the Day — PORTSMOUTH DOCKYARD WORKERS (REFUNDS)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. George Rogers.]

11.40 p.m.

Brigadier Terence Clarke: I am grateful for this opportunity of raising the question of refunds by Ministry of Works employees—not, as the Order Paper says, refunds for Ministry of Works employees. I want to see Ministry of Works employees not have their pay cut.
After speaking at Portsmouth Dockyard gates on 9th October, a week before polling day, I was approached by Ministry of Works employees who worked in the dockyards, although they are not dockyard employees, with the grievance that they were being asked to repay a sum of money. They had been overpaid weekly for the last 18 months—a long time to be overpaid. One man has been overpaid 3s. a week for many weeks, and he was told that from the following week he would have to repay 15s. a week.
I regard that in itself as an imposition. If he had been overpaid 3s. a week, why should he be called upon to repay 15s. a week? This would cause great hardship. First, the man would get 3s. a week less pay and, in addition, he would have to pay back 15s. a week, so that he would be 18s. a week worse off until the debt had been repaid to the Ministry of Works.
I reacted very quickly and wrote to the then Minister of Works. I also telephoned unsuccessfully on the Friday, Saturday and Sunday. On the Monday morning I managed to get through on the telephone to the Minister's secretary. By lunchtime, after threatening him very severely, I received an assurance that the employees could appeal up to 23rd October and that no deduction would be made before 30th October. This caused a certain amount of satisfaction, because up to then my constituents had believed that they would be asked to pay back a lot of money. I conveyed this information to the employees through the Portsmouth Evening News, and I also put down Questions to the Minister of Public Building and Works as soon as the election was over. I received a very

unsatisfactory answer to the Questions, and I was, therefore, forced to raise the matter tonight.
I should like to ask the Minister a few questions, and I hope that I shall give him plenty of time to answer them. Would he say how this overpayment was allowed to continue from September. 1963, to August, 1964? He may well say that he was not in charge at the time. I am not bringing party politics into this. I merely want to know why the machinery of the Department which he has taken over was so rusty that for one year they did not discover that these men were being overpaid. I hope that the Minister agrees that overpayment over such a long period and to so many men could lead to genuine hardship. I should like to know why an overpayment of 3s. a week led to a demand for repayment of 15s. a week. That seems to me very unfair indeed. Subsequently, this 15s. was reduced to 5s. a week.
I would ask the Minister to examine the terms of employment of these men, because I understand that these weekly paid men are under no agreement to refund the mistakes made by the Minister's Department. I understand that there are in law two points: finding of facts, or findings of law. In the one case one keeps the money; the other does not allow one to claim back the money. The Minister, I understand, has no right whatever to reclaim this money. I hope, and I believe, that later he will say that he has no intention of claiming back this money.
I have already quoted in the House, when I put a Question to the Minister a few weeks ago, the case of a schoolmaster who was overpaid £1 3s. a week for three years. The local education committee decided to write off the money. It said that it had in law no right to demand the money back, and would ask for it back, but did not expect to get it, and was writing it off.
I have already said that these overpayments were made through no fault of the employees. On 12th October a letter was written on behalf of the industrial staff of H.M.S. "Mercury" through the proper channels to the works officer at Fareham. I will read it:
Reference the suggested recovery of moneys from M.P.B.W. industrial staff at


H. M. S. "Mercury" I.C. No. 46 of 1963 dated was displayed on the notice board in the appropriate manner in October of 1963, and we were informed that the suggested deductions were not applicable to ourselves. Early in November, 1963, a J.P.C. was paid and as no deduction was made inquiries were instigated by contacting the then Foreman of Works, Mr. Large, who instructed his writer, Mr. Goodchild, to verify that the deductions would be made. After inquiries we were informed that the deductions would not be made, or rather were not applicable to ourselves, as we were an M rated station.
I understand this applies to most of these people in my constituency.
The letter continues:
It is pointed out that these inquiries were instigated to avoid a large repayment at some later date.
These men, in order to avoid repaying this money at a later date, and suspecting they might be overpaid, brought it to the notice of their superior. Nothing was done, and they were told:
We are now informed, some twelve months later, that we are presumed liable to these deductions, the basis of the argument being I.C. No. 28/64 … which ordered these deductions to be implemented from pay week commencing 1st April, 1964. We are not convinced that this directive is applicable and also we consider that there is a good basis for non payment of these arrears in view of the time lag and the obvious chronic lapses in the administration of these matters. It is further pointed out that I.C. 28/64 was not displayed on the notice board and has not been seen by ourselves until today October 12th, and in our opinion any liability that we might have should not commence before the date of this directive.
That letter was written on 12th October, through the normal channels to their own boss, and they have not had an answer to this day. They did say that they did not think they should be paid this money. They were told that they were wrong. They continued to be paid the money. They could not possibly have done more than they did to draw this matter to the attention of their superiors.
I hope that the Minister will say that this is a matter which is very regrettable, but, nevertheless, he is capable of seeing that the people—very poor people, I might say—in my constituency do not have to suffer because somebody has made a really serious mess-up.
I could go on for a long time on this subject, and I have just one or two more things to say. The Minister, in my view, is bound to waive these deductions. The

employees could not have done more to avoid being overpaid. Ending on a personal matter, I would like to draw the attention of the Minister to his inaccuracies in reply to my letter of 3rd November. I wrote to the Minister during the election, when the present incumbent of the seat was not in office, and drew his attention to the serious situation in the dockyard.
I received next day, or two days later, from the secretary who is the same secretary as the Minister now enjoys, a letter saying that he was taking every notice of this matter, that they were not going to charge anyone any money at all until they had had an opportunity to appeal, that the appeal would have to be in by 23rd October, and by 30th October they would consider whether they were going to charge anyone anything at all. The Minister's secretary went on to say:
The Ministry sought a meeting with the Unions to discuss the terms of the recovery, but the Unions would not discuss the terms.
Well, in my constituency they have very little confidence in the unions at all. When they are in trouble they go to their Member of Parliament, and I do everything I can for them. They regard a "bob" to the local association as giving them a far better dividend than they will get by paying sixpence or a shilling a week to the union.
I hope that I shall have a very satisfactory answer from the Minister tonight. I will sit down now because I have promised my hon. Friend the Member for Portsmouth, South (Sir Jocelyn Lucas), who, I know, has this matter at heart, that I will give him the opportunity of saving a few words before the Minister replies.

11.54 p.m.

The Minister of Public Building and Works (Mr. Charles Pannell): I think that I had better reply straight away, but I will try to leave the hon. Member for Portsmouth, South (Sir Jocelyn Lucas) a minute or two at the end. First, I want to make it perfectly clear, on the question of dates, that these were letters written in my predecessor's time. When the hon. and gallant Member for Portsmouth, West (Brigadier Clarke), wrote to my predecessor, he was not a Member of this House. He was a candidate. I had previously had a letter from the Labour candidate for Portsmouth, West,


presumably on the prognosis that I would be the prospective Minister.
This was actually the first thing I took up in my Department when I walked into the office. It is completely true—and the hon. and gallant Gentleman will believe me when I say it—that I was not aware even of the background of the circumstances of which he has spoken when I got a reply out to the letter he had written. I want to make it clear at the beginning that my Ministry will not seek to recover the moneys which have been overpaid.

Brigadier Clarke: All is forgiven.

Mr. Pannell: I think that I had better put this right, and then the hon. Member for Portsmouth, South will be able to make his speech all the better.
I think that the House is entitled to an explanation of all this which, as the hon. and gallant Gentleman said, has nothing political in it. His case had nothing political in it, except that he thought that he gave better value than the trade unions did. Having looked at all the files, it seems that the trade union has played its part.
The overpayment of wages to the Ministry's industrial employees in Portsmouth Dockyard occurred between 13th September, 1963, and 14th August, 1964. It did not come to the notice of my Ministry's London headquarters until last month. On 9th October, while he was a candidate for Portsmouth, West, the hon. and gallant Gentleman wrote to my predecessor about this matter, and received a reply from my predecessor's private secretary on 12th October informing him of the position as it then was. I heard about it a day or two before polling day from the Labour candidate for Portsmouth, West, who wrote to me in Leeds on 13th October.
I began to look into this complex and difficult matter as soon as I was appointed Minister. I have now completed my inquiries and have reached my conclusion on the basis of the most careful consideration and after going into the matter exhaustively.
The Government's policy on matters of this kind was explained by my hon. and learned Friend the Financial Secretary to the Treasury, in a Written Answer to the hon. Member for Portsmouth, South on 26th November, when he said:

It is a long established principle that recovery should be attempted whenever the Exchequer suffers loss through overpayments. In order to avoid hardship, departments may, with Treasury authority, waive recovery of all or part of the overpayment. I am satisfied that this discretionary approach is more likely to do justice both to the individual and to the Exchequer than a more rigid rule."—[OFFICIAL REPORT, 26th November, Vol. 702, c. 211.]
The employees who were overpaid were employed by the Navy Works Department of the Admiralty until 1st April, 1963. At that date they were transferred to the Ministry of Public Building and Works as part of the merger of the works organisations of the three former Service Departments with the former Ministry of Public Building and Works. As this merger took place at rather short notice, the previous administrative arrangements for paying the employees in the Portsmouth Dockyard continued for the time being.
At that time the dockyard management had just made a new agreement with the trade unions to reduce the gap between the earnings of men paid on time rates, and the earnings of men on job rates, that is, those who received additions to their normal rate for any job price contracts they worked on, if they completed certain jobs faster than a given norm. The gap in earnings was to be reduced in two ways. First, there was to be an increase in the time rate. Secondly, there were to be greater deductions from the pay of the men on job rates.
The new agreement came into force on 1st August, 1963. The necessary administrative arrangements for paying the new rates under this agreement were not completed until 13th September, 1963. At that point there was a misunderstanding between the staff in the Admiralty and the staff in my Ministry who were responsible for calculating the pay due to men working on job price contracts. The Ministry staff thought that the Admiralty would make the agreed deductions in the pay of men on job rates, when, in fact, the Admiralty was not making these deductions at all. This was a pure error, made in good faith. As a result, 1,337 men on job rates were overpaid between 13th September, 1963, and 14th August, 1964, by varying amounts, depending on how far they were engaged on job price contracts


during the period in question. The total overpaid amounted to about £6,700.
The error did not come to light until August, 1964. After some discussion the position was reached whereby the Ministry asked the men to repay at a rate not exceeding 5s. a week unless anyone preferred to pay more. The men were told that if anyone represented that this rate of repayment would cause hardship we would consider a lower rate of repayment. Some of the men have objected to the proposed repayment. The trade unions took the view that the overpayments were primarily a matter between the Ministry and each employee and that they should be brought in only over cases where difficulties arose. The trade unions have also suggested that we should consider waiving recovery altogether, as the overpayments arose from an error on the part of the employer, and as recovery might involve hardship for some employees and would undoubtedly give much trouble and expense to the Ministry.
Coercion has been out of the question, and it has never been in my mind to resort to legal action. In addition, it would be unfair to treat different employees differently. Finally, we do not want to get into the position whereby we spend more money in recovering a debt than the amount of the debt itself. We would find it difficult to recover these 1,337 separate debts, and I do not think that we should do so.
I want to make it clear that I have taken this decision on the merits of the case, employing that discretionary approach which my hon. Friend the Financial Secretary mentioned in his reply. This is not a precedent. There cannot be much case law in this kind of matter. Every case has to be judged according to its circumstances, and this is what I have done.
In so far as the hon. and gallant Gentleman went outside that and mentioned other matters—of which he will agree that I had no notice—which make any allegations about what was done by my Department, I can only say that I will make inquiries. I hope that he will acquit me of any discourtesy in this matter. I am not making the excuse because I came fresh to the Ministry, but I did deal with the matter and made

the best inquiries that I could at the time.
There was a slight confusion in the hon. and gallant Gentleman's letter. Reading it one would not entirely have understood the date at which one Minister left and another took over. The hon. and gallant Gentleman himself was no doubt moved by great sympathy with these men—but the letter was written in the middle of the election, and there were some electoral considerations in mind. But as the letter was written to my predecessor I can hardly deal with it now. I would only ask the hon. and gallant Gentleman and the House to believe that I have addressed myself to this matter and have acted throughout in good faith, both to the House and to the hon. and gallant Gentleman individually. I hope that the House will consider this a satisfactory settlement.

12.4 a.m.

Sir Jocelyn Lucas: I wanted to support my hon. and gallant Friend by quoting one case—the case of Bombardier Harris of the Reserve of the Royal Horse Artillery, who, in the Boer War, was sued by the War Office for an overpayment. He won his case and did not have to pay. That is just a precedent. Perhaps the Minister would like to have the details.

Brigadier Clarke: I thank the Minister for his excellent reply, which we shall be very grateful to receive in Portsmouth. I thank him very much and I hope that we shall have long and happy relations in the future.

Sir Douglas Glover: As I did not have an opportunity at Question Time today, but as I seconded the Motion to put you back in the Chair, Mr. Speaker, may I say that I was very happy to see you back in the Chair. I hope that you will take things as easily as you can, because yours is a very onerous duty.

Mr. Speaker: I support the gross irregularity of the hon. Member by saying that I did not have a chance today of thanking hon. Members for the many kind messages that I have received. I particularly thank the Chairman of Ways and Means for taking over at absolutely nil notice the duties of the Chair, and performing them magnificently.

Question put and agreed to.

Adjourned accordingly at five minutes past Twelve o'clock.